Is fiscal policy in the euro area Ricardian?

We empirically determine whether a Ricardian or a non-Ricardian regime is more plausible for the euro area, following the research strategy of Canzoneri et al. (Am Econ Rev 91:1221-1238, 2001). A Vector Auto-Regressive model for the primary government balance and the government debt is estimated for the period from the second quarter 1980 to the fourth quarter of 2013. Our model uses dummy interaction terms to account for the breaks due to the introduction of the Euro Convergence Criteria (ECC) and the beginning of the global financial crisis, respectively. No evidence is found in favour of either regime for the pre-ECC period. In the post-ECC period, a Ricardian regime is more plausible. Some evidence points in the direction of a non-Ricardian regime for the period after the beginning of the financial crisis.