Estimating the elasticity of Intertemporal Substitution using Dividend Tax News Shocks

Rustam Jamilov (), Martin Holm, Marek Jasinski and Plamen Nenov ()

No 02/2024, Working Papers from Centre for Household Finance and Macroeconomic Research (HOFIMAR), BI Norwegian Business School

Abstract: This paper studies the spending response to news about a dividend tax reform to estimate the elasticity of intertemporal substitution (EIS). The Norwegian dividend tax reform was proposed in 2003, announced in 2004, and implemented in 2006, raising the dividend tax rate by 28 percentage points. We compare the spending responses of exposed households to a control group with no dividend income. Exposed households increased spending after the news and reduced spending after implementation. We show that this behavior is only consistent with an EIS above one. Using a capitalistworker framework, we estimate the EIS to be around 1.6.

Pages: 60 pages
Date: 2024
New Economics Papers: this item is included in nep-pbe
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https://hdl.handle.net/11250/3147289

Related works:
Working Paper: Estimating the Elasticity of Intertemporal Substitution using Dividend Tax News Shocks (2024)
Working Paper: Estimating the elasticity of intertemporal substitution using dividend tax news shocks (2024)
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