Ricardo Barro

Running Head : Ricardo Barro

Introduction

The attempt to build macroeconomic models on the basis of concrete microeconomic fundamentals was expanded in the 1970 's through intense scholarly inquisition into the 19th century classical macroeconomics . A notable development was the issue of the relationship between taxation and public debt . David Ricardo , a 19th century economist , had predicted that taxation and public debt did exert equivalent effects . His prediction was later justified and further developed , by Professor Robert J . Baro who independently re-examined the concept Buchanan (1976

Biography of David Ricardo p

According to Snowdon Vane (2002 , David Ricardo was one of the `greatest theoretical economists of all time . Born in London , on April 19th , 1772 , to a Jewish father who was a prosperous Merchant Banker , he started a career as a stock broker by joining his father 's trade in 1776 at the age of 14 . ECONLIB (2008 ) notes that , Ricardo developed interest in economic theory after reading Adam Smith 's book , `The Wealth of Nations ' wrote his first economics article aged thirty seven , was a firm believer in the quantitative theory of money , which evolved to be known as monetarism in contemporary society , we would note that Ricardo was a monetarist

A prominent contribution to England 's economy was the resolution of the infamous `bullion controversy , of 1809 ' a controversy in which inflation engulfed England as a result of the Bank of England 's issuance of excess bank notes . His 1815 essay titled `Essay on the Influence of a Low Price of Corn on the Profits of Stocks ' is said to have been a precursor of the law of diminishing returns a very important economics law which predicts a reduction of output when factors of production are increased while resources are fixed

He is further noted to have opposed protectionist Corn Law , thus was an advocate of free trade . He believed that the placement of trade barriers encouraged unnecessarily high rent rates leading to artificially high food prices . He was also a key developer of the concept of comparative advantage also an important economics concept which asserts that a country is better off when it acquires goods from another country which produces the same good at a relatively cheaper cost

He is further credited with his use of complex equations to arrive at economic solutions , hence popularizing the application of mathematical tools to economic analysis , a notable example , his theory of rents ECONLIB (2008 . In the theory , Ricardo shows mathematically that the increase in population growth resulted into an increment in demand for land hence additional land must be cultivated to meet the additional expense . As these increments arises , rents of all land rise hence the profits fall

David Ricardo and the Ricardo-Barro Equivalence Theorem (Ricardian Equivalence

The Ricardo-Barro equivalence theorem was first articulated by David Ricardo , though in its recent form , was expanded by Professor Robert Barro thus the name `Ricardo-Barro Equivalence

The model is a notable contribution of Ricardo and tackles he issue of public debt . Is public debt...