The so-called Ricardian equivalence suggests that a government will have the same effect on private spending whether it raises taxes or takes on additional debt to finance higher government spending. The logic behind it is that as the government gets more indebted, people would put aside more money in expectation of higher taxes in the future. However, there is no consensus on the empirical validity of Ricardian equivalence (see Seater 1993 for a comprehensive review).
However, an obvious corollary of the Ricardian equivalence is that the countries with more government debt should also be the ones with higher accumulated savings by households. A look at the situation in the EU15 countries before the Great Recession provides some empirical support to this statement. We have compared the government debt burdens and the net financial assets of households in the EU15 countries other than Luxembourg in 2007, the last year for which full data on household financial assets is available from Eurostat. To arrive at a proxy for household NFAs we subtracted the household loan stock at the end of 2007 as per the OECD statistics database from the households’ stock of financial assets