We study whether entrepreneurs reduce investment in response to news about public debt. Ricardian equivalence (Barro, 1974) states that an increase in government debt will cause people to expect increased taxes in the future, and hence implies lower investment. We test whether entrepreneurs' expectations about the future and their investment change in response to public debt. We do this by using three survey experiments as well as historical data on the real investment decisions of entrepreneurs. We find that entrepreneur's investment plans are highly sensitive to public debt and that historically "public debt averse" entrepreneurs invest less in years when public debt is more salient.

Our survey experiments include a conjoint analysis, where entrepreneurs are presented with potential future states of the economy (with various characteristics randomized) and asked about their investment plans, an information provision experiment where entrepreneurs are provide with either a high or low forecast of future public debt as well as a survey hypothetical, where they are asked how they would respond to the government receiving an unexpected windfall. Across all experiments, we find that entrepreneurs are highly sensitive to news about public debt, and that this is not driven by experimenter demand effects.

We also link survey responses to historical investment data and find that, in years where parliament discuss public debt more, entrepreneurs who consider public debt to be a major political problem invest less.