Taxation, Debt and Relative Prices in the Long Run: The Irish Experience

Vahagn Galstyan and Adnan Velic

The Economic and Social Review, 2017, vol. 48, issue 3, 231-251

Abstract: This paper investigates the effects of public debt and distortionary labour taxation on the long-run behaviour of Irish relative non-traded goods prices. We highlight that higher public debt, acting through higher taxes, has an equivocal impact on the relative supply of non-traded goods and, correspondingly, relative prices. Our empirical analysis for Ireland suggests that taxes and public debt play significant roles in the long run, comoving negatively with the relative price of non-tradables. Accordingly, shifts in public debt and taxation bear implications for the country’s international price competitiveness.

Keywords: taxation; debt; Ireland (search for similar items in EconPapers)
Date: 2017
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Working Paper: Taxation, Debt and Relative Prices in the Long Run: The Irish Experience (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:eso:journl:v:48:y:2017:i:3:p:231-251

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