EconPapers    
Economics at your fingertips  
 

Understanding the Aggregate Effects of Anticipated and Unanticipated Tax Policy Shocks

Karel Mertens () and Morten Ravn ()

Review of Economic Dynamics, 2011, vol. 14, issue 1, 27-54

Abstract: This paper evaluates the extent to which a DSGE model can account for the impact of tax policy shocks. We estimate the response of macroeconomic aggregates to anticipated and unanticipated tax shocks in the U.S. and find that unanticipated tax cuts have persistent expansionary effects on output, consumption, investment and hours worked. Anticipated tax cuts give rise to contractions in output, investment and hours worked prior to their implementation, while stimulating the economy when implemented. We show that a DSGE model can account quite successfully for these findings. The main features of the model are adjustment costs, consumption durables, variable capacity utilization and habit formation. (Copyright: Elsevier)

Keywords: Fiscal policy; Tax shocks; Anticipation effects; Structural estimation (search for similar items in EconPapers)
JEL-codes: E20 E32 E62 H30 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (144) Track citations by RSS feed

Downloads: (external link)
http://dx.doi.org/10.1016/j.red.2010.07.004
Access to full texts is restricted to ScienceDirect subscribers and institutional members. See http://www.sciencedirect.com/ for details.

Related works:
Software Item: Code and data files for "Understanding the Aggregate Effects of Anticipated and Unanticipated Tax Policy Shocks" (2010) Downloads
Working Paper: Online Appendix to "Understanding the Aggregate Effects of Anticipated and Unanticipated Tax Policy Shocks" (2010) Downloads
Working Paper: Understanding the Aggregate Effects of Anticipated and Unanticipated Tax Policy Shocks (2009) Downloads
Working Paper: Understanding the Aggregate Effects of Anticipated and Unanticipated Tax Policy shocks (2009) 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:red:issued:09-221

Ordering information: This journal article can be ordered from
https://www.economic ... ription-information/

DOI: 10.1016/j.red.2010.07.004

Access Statistics for this article

Review of Economic Dynamics is currently edited by Loukas Karabarbounis

More articles in Review of Economic Dynamics from Elsevier for the Society for Economic Dynamics Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().

 
Page updated 2021-08-01
Handle: RePEc:red:issued:09-221