A reconciliation of SVAR and narrative estimates of tax multipliers

Karel Mertens and Morten Ravn

Journal of Monetary Economics, 2014, vol. 68, issue S, S1-S19

Abstract: Existing empirical estimates of US nationwide tax multipliers vary from close to zero to very large. Using narrative measures as proxies for structural shocks to total tax revenues in an SVAR, we estimate tax multipliers at the higher end of the range: around two on impact and up to three after 6 quarters. We show that earlier findings of lower multipliers can be explained by an output elasticity of tax revenues assumption that is contradicted by empirical evidence or by failure to account for measurement error in narrative series of tax shocks.

Date: 2014
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Related works:
Working Paper: A Reconciliation of SVAR and Narrative Estimates of Tax Multipliers (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:68:y:2014:i:s:p:s1-s19

DOI: 10.1016/j.jmoneco.2013.04.004

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