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The output effects of tax changes: narrative evidence from Spain

Paula Gil, Francisco Martí, Richard Morris, Javier Pérez () and Roberto Ramos ()
Additional contact information
Paula Gil: Universidad Complutense de Madrid
Francisco Martí: Banco de España
Richard Morris: European Central Bank

No 1721, Working Papers from Banco de España, Working Papers Homepage

Abstract: This paper estimates the GDP impact of legislated tax changes in Spain using a newly constructed narrative record for the period 1986-2015. Our baseline estimates suggest that a 1% of GDP increase in exogenous taxes depresses output by around 1.3% after one year, this negative effect fading away at more distant horizons. We also find that the effect of changes in indirect taxes are larger and that, following a tax increase, investment reacts more than consumption. Overall, our set of estimates is consistent with negative output effects triggered by tax increases, yet the quantitative effects are subject to non-negligible uncertainty that is refected in wide confidence bands, in line with the extant literature for other countries.

Keywords: tax shocks; narrative record; fiscal policy; GDP growth (search for similar items in EconPapers)
JEL-codes: E32 E62 H20 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2017-05
New Economics Papers: this item is included in nep-dcm, nep-eur, nep-mac and nep-pbe
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Citations: View citations in EconPapers (3) Track citations by RSS feed

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http://www.bde.es/f/webbde/SES/Secciones/Publicaci ... /17/Fich/dt1721e.pdf First version, May 2017 (application/pdf)

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Journal Article: The output effects of tax changes: narrative evidence from Spain (2019) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:1721

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