Fiscal rules and tax policy cyclicality

Christos Chrysanthakopoulos and Athanasios Tagkalakis

Economics Letters, 2023, vol. 225, issue C

Abstract: Using a group of 52 countries over the period 1985–2019, we assess the effect of fiscal rules on time varying measures of VAT, corporate and personal income tax rate cyclicality. We find that budget balance and revenue rules increase the degree of tax policy cyclicality, while spending rules induce a pro-cyclical tax policy response. Moreover, the specific design features of fiscal rules are significant determinants of the degree of tax policy cyclicality.

Keywords: Tax policy; Fiscal rules; Time-varying coefficients; Cyclicality (search for similar items in EconPapers)
JEL-codes: C22 E32 E62 H20 H30 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:225:y:2023:i:c:s0165176523000605

DOI: 10.1016/j.econlet.2023.111035

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