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Regional Effects of Federal Tax Shocks

Bernd Hayo and Matthias Uhl ()

No 201217, MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: This paper studies regional output asymmetries following U.S. federal tax shocks. We estimate a vector autoregressive model for each U.S. state, utilizing the exogenous tax shock series recently proposed by Romer and Romer (2010) and find considerable variations: estimated output multipliers lie between –0.2 in Utah and –3.3 in Hawaii. Statistically, the difference between state and national output effect is significant in about half the U.S. states. Analyzing the determinants of differences in the magnitude of regional tax multipliers suggests that industry composition of output and sociodemographic characteristics help explain the observed asymmetry across U.S. states in the transmission of federal tax policy.

Keywords: Fiscal; Policy; Tax; Policy; Narrative; Approach; U.S.; States; Regional; Effects; Asymmetries; in; Fiscal; Policy; Transmission (search for similar items in EconPapers)
JEL-codes: E32 E62 H20 R10 R11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc, nep-geo, nep-mac, nep-pbe, nep-pub and nep-ure
Date: 2012
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Journal Article: Regional effects of federal tax shocks (2015) Downloads
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