State-Dependent Macroeconomic Effects of Tax Changes

2019 ◽  
Author(s):  
Ruhollah Eskandari
Keyword(s):  
State Dependent ◽  
Macroeconomic Effects ◽  
Tax Changes

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

2019 ◽  
Vol 109 (7) ◽  
pp. 2679-2691 ◽  
Author(s):  
Karel Mertens ◽  
Morten O. Ravn
Keyword(s):  
United States ◽  
Income Tax ◽  
The United States ◽  
Corporate Income Tax ◽  
Dynamic Effects ◽  
Valid Inference ◽  
Macroeconomic Effects ◽  
Tax Changes ◽  
Inference Methods

In this reply to a comment by Jentsch and Lunsford, we show that the evidence for economic and statistically significant macroeconomic effects of tax changes in Mertens and Ravn (2013) remains present for a range of asymptotically valid inference methods. (JEL E23, E62, H24, H25, H31, H32)

scholarly journals Transfer Payments and the Macroeconomy: The Effects of Social Security Benefit Increases, 1952–1991

2016 ◽  
Vol 8 (4) ◽  
pp. 1-42 ◽  
Author(s):  
Christina D. Romer ◽  
David H. Romer
Keyword(s):  
Monetary Policy ◽  
Social Security ◽  
Industrial Production ◽  
Positive Response ◽  
Social Security Benefit ◽  
Transfer Payments ◽  
Macroeconomic Effects ◽  
Tax Changes

This paper uses Social Security benefit increases from 1952 to 1991 to investigate the macroeconomic effects of changes in transfers. It finds a large, immediate, and significant positive response of consumption to permanent benefit increases. The response declines after about five months, and does not appear to spread to industrial production or employment. The effects of transfers are faster, but much less persistent and much smaller overall, than those of tax changes. Finally, monetary policy responds strongly to benefit increases but not to tax changes. This may account for the failure of the effects of transfers to persist or spread. (JEL E21, E62, E63, H31, H55)

scholarly journals Discretionary Tax Changes and the Macroeconomy: New Narrative Evidence from the United Kingdom

2013 ◽  
Vol 103 (4) ◽  
pp. 1507-1528 ◽  
Author(s):  
James Cloyne
Keyword(s):  
United States ◽  
United Kingdom ◽  
The United States ◽  
Policy Changes ◽  
Narrative Strategy ◽  
The United Kingdom ◽  
Macroeconomic Effects ◽  
The Uk ◽  
Tax Changes ◽  
Strategy I

This paper provides new estimates of the macroeconomic effects of tax changes using a new narrative dataset for the United Kingdom. Identification is achieved by isolating “exogenous” tax policy changes using the Romer and Romer narrative strategy. I find that a 1 percent cut in taxes increases GDP by 0.6 percent on impact and 2.5 percent over three years. The findings are remarkably similar to Romer and Romer narrative estimates for the United States, reinforcing the view that tax changes have powerful and persistent effects. “Exogenous” tax changes are also shown to have contributed to important episodes in the UK business cycle. (JEL E23, E32, E62, H20, H61)

The macroeconomic effects of legislated tax changes in Germany

2013 ◽  
Vol 66 (2) ◽  
pp. 397-418 ◽  
Author(s):  
B. Hayo ◽  
M. Uhl
Keyword(s):  
Macroeconomic Effects ◽  
Tax Changes

When is discretionary fiscal policy effective?

2020 ◽  
Vol 0 (0) ◽  
Author(s):  
Steven M. Fazzari ◽  
James Morley ◽  
Irina Panovska
Keyword(s):  
Government Spending ◽  
State Dependence ◽  
Vector Autoregressive ◽  
Discretionary Fiscal Policy ◽  
State Dependent ◽  
Policy Shocks ◽  
The Business Cycle ◽  
Nonlinear Vector ◽  
Tax Changes ◽  
Deep Recession

AbstractWe investigate the effects of discretionary changes in government spending and taxes using a medium-scale nonlinear vector autoregressive model with policy shocks identified via sign restrictions. Tax cuts and spending increases have larger stimulative effects when there is excess slack in the economy, while they are much less effective, especially in the case of government spending increases, when the economy is close to potential. We find that contractionary shocks have larger effects than expansionary shocks across the business cycle, but this is much more pronounced during deep recessions and sluggish recoveries than in robust expansions. Notably, tax increases are highly contractionary and largely self-defeating in reducing the debt-to-GDP ratio when the economy is in a deep recession. The effectiveness of discretionary government spending, including its state dependence, appears to be almost entirely due to the response of consumption. The responses of both consumption and investment to discretionary tax changes are state dependent, but investment plays the larger quantitative role.

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