The Short-Term Effects of Tax Changes—Evidence for State Dependence: Working Paper 2016-03

Ufuk Demirel

No 51824, Working Papers from Congressional Budget Office

Abstract: This study evaluates how the state of the economy, as measured by the rate of unemployment, influences the short-term effects of tax changes on output and employment. I examine the effects of narratively identified tax changes by employing two alternative approaches to estimating state-dependent impulse response functions that have been widely used in the recent literature. Both approaches suggest that short-term effects of tax changes on output and employment become smaller during times of higher unemployment. That may be because changes in incentives governing the supply

JEL-codes: E20 E60 H20 (search for similar items in EconPapers)
Date: 2016-08-03
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (6)

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