Taxation and consumption: evidence from a representative survey of the German population

Bernd Hayo and Matthias Uhl

Applied Economics, 2017, vol. 49, issue 53, 5477-5490

Abstract: Using a representative survey of the German population, this article studies self-reported individual consumption responses to a recent exogenous payroll tax reduction. About 55% of the respondents report that they spend the extra money, indicating considerable potential for tax changes to affect consumption and economic activity. Our analysis of the socio-demographic and economic covariates of consumption responses suggests, among other effects, that interest rates are related to consumption responses to tax changes, and that households with higher income have a higher propensity to consume.

Date: 2017
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Working Paper: Taxation and Consumption: Evidence from a Representative Survey of the German Population (2014)
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DOI: 10.1080/00036846.2017.1310997

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