The public debt and the Ricardian equivalence: Some critical remarks.

• The article criticizes the so-called Ricardian Equivalence (RE), which is at the heart of the mainstream approach to the problem of the public debt. • The article criticizes and rejects two basic features of the RE: i) the view of the economic role of the state as merely 'parasitic'; ii) the unwarranted extension of the micro-economic analysis of debts to the macro-economic level. • A different approach to the public debt problem is suggested. The state is not seen as a mere parasite. The government, by restructuring its expenditure, can contribute to raise the economy's rate of growth and ensure a stable and sustainable ratio of the public debt to GDP. The paper criticizes the so-called Ricardian Equivalence (RE) and its implications for the analysis of the problem of the public debt. The RE hinges on a view of the economic role of the state as merely parasitic and on an unwarranted extension of the micro-economic analysis of debts to the macro-economic level. The RE is at the heart of the mainstream approach to the public debt and the policies that indicate the running of primary surpluses as the only way to stabilize its ratio to GDP. The paper suggests a different 'non-Ricardian' approach in which the state is not a mere parasite. The government, by restructuring its expenditure, can contribute to raise the economy's rate of growth and ensure a stable and sustainable ratio of the public debt to GDP, without necessarily running primary surpluses. [ABSTRACT FROM AUTHOR]