The Effects of Tax Shocks on Output: Not So Large, But Not Small Either

2012 ◽  
Vol 4 (2) ◽  
pp. 214-237 ◽  
Author(s):  
Roberto Perotti
Keyword(s):  
Macroeconomic Variables ◽  
Significant Evidence ◽  
Tax Revenues ◽  
Automatic Response ◽  
Tax Shocks ◽  
Tax Changes ◽  
Anticipation Effects

I argue that, on theoretical grounds, the discretionary component of taxation should be allowed to have different effects than the automatic response of tax revenues to macroeconomic variables. Based on a novel dataset, I show two results. First, responses to a tax shock that allow for a distinction between the discretionary and the endogenous components of tax changes are about halfway between the large effects estimated by Romer and Romer (2010) and the smaller effects estimated, for instance, by Favero and Giavazzi (2012) or Blanchard and Perotti (2002). Second, there is almost no statistically significant evidence of anticipation effects. (JEL E23, E62, H22, H24, H25, K34)

scholarly journals Empirical Evidence on the Aggregate Effects of Anticipated and Unanticipated US Tax Policy Shocks

2012 ◽  
Vol 4 (2) ◽  
pp. 145-181 ◽  
Author(s):  
Karel Mertens ◽  
Morten O Ravn
Keyword(s):  
Business Cycle ◽  
The United States ◽  
Real Wages ◽  
Hours Worked ◽  
Aggregate Consumption ◽  
Policy Shocks ◽  
Tax Shocks ◽  
Tax Changes ◽  
Anticipation Effects ◽  
Tax Cuts

We provide evidence on the dynamic effects of tax liability changes in the United States. We distinguish between surprise and anticipated tax changes. Preannounced but not yet implemented tax cuts give rise to contractions in output, investment, and hours worked while real wages increase. There are no significant anticipation effects on aggregate consumption. Implemented tax cuts, regardless of their timing, have expansionary effects, on output, consumption, investment, hours worked, and real wages. Results are shown to be robust. Tax shocks are important impulses to the US business cycle and anticipation effects have been important during several business cycle episodes. (JEL E23, E32, E62, H20, H30)

scholarly journals Analisis Dampak Kebijakan Fiskal terhadap Pertumbuhan Ekonomi di Indonesia

2010 ◽  
Vol 10 (2) ◽  
pp. 159-174 ◽  
Author(s):  
Ahmad Nawawi ◽  
Ferry Irawan
Keyword(s):  
Fiscal Policy ◽  
Dynamic Response ◽  
Disposable Income ◽  
Government Expenditures ◽  
Impulse Responses ◽  
Tax Revenues ◽  
Policy Shocks ◽  
Tax Shocks

This paper presents an analysis of the effect of fiscal policy in Indonesia based on a VAR approach. Fiscal policy shocks are identified as a structural residuals related to unexpected government expenditures and tax revenues. Impulse responses are then used to simulate the dynamic response of key macroeconomics variables of shocks. The analysis shows that GDP responses negatively to tax shocks, and positively to expenditure shock. Moreover, disposable income and private consumptionreact negatively to taxation and positively to government expenditures. Altogether the results are consistent with that of Keynesian models.

scholarly journals The Aging of the Baby Boomers: Demographics and Propagation of Tax Shocks

2020 ◽  
Vol 12 (2) ◽  
pp. 167-193
Author(s):  
Domenico Ferraro ◽  
Giuseppe Fiori
Keyword(s):  
Labor Force ◽  
Baby Boomers ◽  
Unemployment Rate ◽  
Age Groups ◽  
Marginal Tax Rate ◽  
Structural Shocks ◽  
Tax Rate ◽  
Tax Shocks ◽  
Tax Changes ◽  
Tax Cuts

We study how the changing demographic composition of the US labor force has affected the response of the unemployment rate to marginal tax rate shocks. Using narratively identified tax changes as proxies for structural shocks, we establish that the responsiveness of the unemployment rates to tax changes varies significantly across age groups: the unemployment rate response of the young is nearly twice as large as that of the old. This heterogeneity is the channel through which shifts in the age composition of the labor force impact the response of the unemployment rate to tax cuts. We find that the aging of the baby boomers considerably reduces the effects of tax cuts on aggregate unemployment. (JEL E24, E62, H24, H31, J21)

The Effects of Tax Changes at the Zero Lower Bound: Evidence from Japan

2018 ◽  
Vol 108 ◽  
pp. 513-518 ◽  
Author(s):  
Akihisa Kato ◽  
Wataru Miyamoto ◽  
Thuy Lan Nguyen ◽  
Dmitriy Sergeyev
Keyword(s):  
Lower Bound ◽  
Economic Conditions ◽  
Narrative Approach ◽  
Zero Lower Bound ◽  
Macroeconomic Variables ◽  
Aggregate Consumption ◽  
Tax Changes

We use the narrative approach to identify tax changes unrelated to current economic conditions and estimate the effects of these changes on macroeconomic variables during and outside of the zero lower bound period in Japan. We find little difference in the output responses across the two periods. However, the responses of aggregate consumption, investment, and imports are significantly different in the two periods within the first few quarters.

scholarly journals The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States

2013 ◽  
Vol 103 (4) ◽  
pp. 1212-1247 ◽  
Author(s):  
Karel Mertens ◽  
Morten O Ravn
Keyword(s):  
United States ◽  
Income Tax ◽  
The United States ◽  
Income Taxes ◽  
Dynamic Effects ◽  
Different Types ◽  
Short Run ◽  
Tax Shocks ◽  
Tax Changes ◽  
Narrative Account

This paper estimates the dynamic effects of changes in taxes in the United States. We distinguish between changes in personal and corporate income taxes and develop a new narrative account of federal tax liability changes in these two tax components. We develop an estimator which uses narratively identified tax changes as proxies for structural tax shocks and apply it to quarterly post-WWII data. We find that short run output effects of tax shocks are large and that it is important to distinguish between different types of taxes when considering their impact on the labor market and on expenditure components. (JEL E23, E62, H24, H25, H31, H32)

scholarly journals The Macroeconomic Effects of Income and Consumption Tax Changes

2021 ◽  
Vol 13 (2) ◽  
pp. 439-466
Author(s):  
Anh D.M. Nguyen ◽  
Luisanna Onnis ◽  
Raffaele Rossi
Keyword(s):  
Income Tax ◽  
Transmission Mechanism ◽  
Consumption Tax ◽  
Indirect Taxation ◽  
The United Kingdom ◽  
Tax Shocks ◽  
Tax Changes ◽  
Consumption Taxes ◽  
Narrative Account ◽  
Tax Cuts

This paper estimates the effects of exogenous changes in income and consumption taxes. The tax shocks are proxied with a narrative account of tax liability changes in the United Kingdom. Income tax cuts have large effects on GDP, private consumption, and investment. The effects of consumption tax cuts are modest and not statistically significant on GDP and its components. Shifting the burden of taxation from income to consumption is expansionary. Consistent with conventional public finance theories, these results indicate that it is crucial to distinguish between direct and indirect taxation when studying the transmission mechanism of fiscal policy. (JEL E21, E22, E23, H24, H25)

scholarly journals Performance assessment of reform in the field of ensuring Ukraine’s tax security

2020 ◽  
Vol 2020 (3) ◽  
pp. 144-154
Author(s):  
Oleksandr KUSHNERUK ◽  
◽  
Nataliia ALEKSEIENKO ◽  
Keyword(s):  
Tax Evasion ◽  
Tax Administration ◽  
Tax Burden ◽  
Tax Reforms ◽  
State Budget ◽  
Tax System ◽  
Tax Revenues ◽  
Tax Changes ◽  
Revenue Administration ◽  
Positive Effect

During the period of 2014-2019 Ukraine experienced many tax changes, which concerned the optimization of the tax system to overcome threats to tax security in the field of tax payment, filling of the state budget and tax administration. Changes in the tax system have significantly affected the amount of tax revenues, but there is uncertainty about their effectiveness in ensuring tax security. The purpose of the article is to quantify the level of effectiveness of tax reforms in order to ensure tax security. Based on the analysis of publications in 2016-2019, major tax reforms in Ukraine were studied and the indicators that assess the effectiveness of reforms in the field of tax security were selected. The analysis of indicators of efficiency of administration and tax burden in Ukraine, Georgia and Poland in 2008-2019 is carried out. It is determined that there has been a reduction in the risks of tax evasion and the risks of non-payment of taxes due to improved tax administration. In general, the time for tax administration in Ukraine was significantly reduced and this was the most drastic change. In 10 years, the time of preparation and payment of taxes (hours) has been reduced from 860 hours to 328 hours! As a result, the risks of tax evasion in Ukraine have decreased due to the reduction of the tax burden on business; the administration of taxes and contributions has become more efficient, which reduces the risks of tax evasion. These indicators affected the amount of tax revenues and relative indicators of the tax burden. Tax revenues (% of GDP) in Ukraine increased by 2.27% of GDP. This means that the efficiency of tax revenue administration has improved, which has a positive effect on the level of tax security. As a result, the tax system has become more transparent.

McCain Plan Relies on Tax Changes, Cost Control

2008 ◽  
Vol 41 (10) ◽  
pp. 44
Author(s):  
MARY ELLEN SCHNEIDER
Keyword(s):  
Cost Control ◽  
Tax Changes

McCain Plan Relies on Tax Changes, Cost Control

2008 ◽  
Vol 36 (6) ◽  
pp. 58
Author(s):  
MARY ELLEN SCHNEIDER
Keyword(s):  
Cost Control ◽  
Tax Changes
Sign in / Sign up

Export Citation Format

Share Document