A Tax Rebate in A Recession: Is It Safe and Effective?

Kenneth Lewis and Laurence Seidman

No 05-20, Working Papers from University of Delaware, Department of Economics

Abstract: Is a tax rebate safe and effective? Simulations with an empirically-tested macro-econometric model are used to estimate the impact of the actual 2001 tax rebate in the U.S. and of a rebate twice as large repeated in three additional quarters, and the results of the simulations are interpreted in light of two important recent empirical studies of the spending of the 2001 rebate by households. Our simulations show that as long as a tax rebate is temporary and detriggered when the recession ends, its use during a recession does not pose a significant debt or inflation problem. We find that at the end of one year the larger repeated rebate would have reduced the unemployment rate from 5.9% to at least 5.2%. Thus, a triggered tax rebate is a safe and effective anti-recession policy.

Keywords: Recession; Fiscal Policy; Tax Rebate (search for similar items in EconPapers)
JEL-codes: E62 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2005
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://graduate.lerner.udel.edu/sites/default/file ... 2005/UDWP2005-20.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://graduate.lerner.udel.edu/sites/default/files/ECON/PDFs/RePEc/dlw/WorkingPapers/2005/UDWP2005-20.pdf [301 Moved Permanently]--> https://lerner.udel.edu/sites/default/files/ECON/PDFs/RePEc/dlw/WorkingPapers/2005/UDWP2005-20.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:dlw:wpaper:05-20

Access Statistics for this paper

More papers in Working Papers from University of Delaware, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Saul Hoffman ().