Testing the Tax Smoothing Hypothesis of Fiscal Policy: Some Evidence from Italy

G.M. Barisone

Discussion Papers from University of Exeter, Department of Economics

Abstract: This paper tests Barro's (1979) tax smoothing model of fiscal policy. The model implies that budget deficits and surpluses are used optimally to minimise the distortionary effects of taxation, given a certain path of spending. The theory has a number of implications both for the statistical time series properties of government budget data and for causality amongst these variables. These implications are derived and tested on a vector autoregression model using annual data for Italy covering the period for the full sample. However, when we consider the post World War II period all of the tests clearly reject the tax smoothing hypothesis.

Keywords: FISCAL POLICY; TAXES (search for similar items in EconPapers)
JEL-codes: E6 H21 (search for similar items in EconPapers)
Date: 1998
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:exe:wpaper:9813

Access Statistics for this paper

More papers in Discussion Papers from University of Exeter, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Sebastian Kripfganz ().