Empirical Tests of the Ricardian Hypothesis

In accordance with the tenets of economic methodology, a hypothesis must be tested by using the real world data to gauge its explanatory power. The Ricardian hypothesis had to wait for 134 years before the first attempts on its empirical corroboration were made. MacDougall’s (1951, 1952) studies were the first attempts to test the Ricardian hypothesis. His work was followed by several other economists. In this chapter, we discuss the methods used to test the Ricardian hypothesis, summarise the important results, and form an overall opinion about whether the hypothesis is empirically valid or not.