EconPapers    
Economics at your fingertips  
 

Explaining output volatility: The case of taxation

Olaf Posch

Journal of Public Economics, 2011, vol. 95, issue 11, 1589-1606

Abstract: This paper presents strong empirical evidence that the observed heterogeneity of output volatility across countries and over time is partly endogenous. In particular, based on a closed-form solution we obtain a (long-run) equilibrium relationship between taxes and output volatility in the stochastic neoclassical growth model by showing that asymptotically the variance of output growth rates is affected by the level of taxes, without affecting the mean. We estimate the tax semi-elasticities on output volatility and provide convincing empirical evidence that taxes are important to understand differences in output volatility among OECD countries.

Keywords: Macroeconomic volatility; Tax effects; Continuous-time DSGE models (search for similar items in EconPapers)
JEL-codes: E32 E62 H31 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0047272711000818
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Explaining Output Volatility: The Case of Taxation (2009) Downloads
Working Paper: Explaining output volatility: The case of taxation (2008) Downloads
Working Paper: Explaining Output Volatility: the Case of Taxation (2006) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:95:y:2011:i:11:p:1589-1606

DOI: 10.1016/j.jpubeco.2011.05.009

Access Statistics for this article

Journal of Public Economics is currently edited by R. Boadway and J. Poterba

More articles in Journal of Public Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2025-03-19
Handle: RePEc:eee:pubeco:v:95:y:2011:i:11:p:1589-1606