The effects of tax changes on economic activity: a narrative approach to frequent anticipations

Sandra García-Uribe

No 1828, Working Papers from Banco de España

Abstract: This paper studies the effects of anticipations of tax changes in the USA through the release of tax news in the media. I construct a new measure that captures the anticipation of tax bill approvals by exploiting the content of news in the US television. Since this information typically flows faster than standard measures of GDP, I propose a mixed frequency dynamic factor model to estimate both the economic activity latent factor and the effects of anticipated tax shocks on it. I find that onemonth-ahead media anticipations of tax approvals significantly stimulate current economic activity. This stimulation comes from anticipations of tax cuts.

Keywords: fiscal policy; taxation; mass media; information; beliefs; random forests (search for similar items in EconPapers)
JEL-codes: D80 E62 H20 N12 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2018-09
New Economics Papers: this item is included in nep-mac, nep-pbe and nep-pub
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https://www.bde.es/f/webbde/SES/Secciones/Publicac ... 18/Files/dt1828e.pdf First version, September 2018 (application/pdf)

Related works:
Journal Article: The Effects of Tax Changes on Economic Activity: A Narrative Approach to Frequent Anticipations (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:1828

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