 Unpleasant surprises? Elections and tax news shocksAntonio David and Can Sever European Journal of Political Economy, 2025, vol. 86, issue C Abstract: Unanticipated changes in tax policy are likely to have different macroeconomic effects compared to anticipated changes due to several mechanisms. It is therefore important to understand what drives such policy surprises. We explore the nature of unanticipated tax policy changes by focusing on a political economy determinant of those events, namely the timing of elections. Using monthly data for 22 advanced economies and emerging markets over the period 1990-2018, we show that implementation lags tend to be longer for tax policy change announcements that are made during pre-election periods, thereby leading to a lower likelihood of ”tax news shocks”. We also find that implementation lags become much shorter for tax policy changes that are announced in the aftermath of elections. This pattern remains similar for different tax measures and types of taxes. The findings are robust to a number of checks, including controlling for various economic, institutional and political factors. Keywords: Tax shocks; Electoral cycles; Political economy (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:86:y:2025:i:c:s0176268024001241 DOI: 10.1016/j.ejpoleco.2024.102622 Access Statistics for this article European Journal of Political Economy is currently edited by J. De Haan, A. L. Hillman and H. W. Ursprung More articles in European Journal of Political Economy from Elsevier |
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