The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States

Morten Ravn and Karel Mertens

No 8554, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper estimates the dynamic effects of changes in taxes in the United States. We distinguish between the effects of changes in personal and corporate income taxes using a new narrative account of federal tax liability changes in these two tax components. We develop an estimator in which narratively identified tax changes are used as proxies for structural tax shocks and apply it to quarterly post WWII US data. We find that short run output effects of tax shocks are large and that it is important to distinguish between different types of taxes when considering their impact on the labor market and the major expenditure components.

Keywords: Fiscal policy; Measurement error; Narrative identification; Tax changes (search for similar items in EconPapers)
JEL-codes: E20 E32 E62 H30 (search for similar items in EconPapers)
Date: 2011-09
New Economics Papers: this item is included in nep-acc, nep-mac and nep-pbe
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Citations: View citations in EconPapers (8)

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Related works:
Journal Article: The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States (2013)
Working Paper: The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States (2012)
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