Tax news in good and bad times

Sandeep Kumar Rangaraju and Ana María Herrera

Economics Letters, 2021, vol. 207, issue C

Abstract: We investigate whether the effect of tax news depends on the state of the economy. Using U.S. quarterly data, we show that news about future tax cuts are more contractionary during recessions. This nonlinearity is mainly due to the response of durable consumption and, especially, nonresidential investment.

Keywords: Fiscal policy; Policy foresight; Anticipated tax shocks (search for similar items in EconPapers)
JEL-codes: C32 E62 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:207:y:2021:i:c:s0165176521003086

DOI: 10.1016/j.econlet.2021.110031

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