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Taxation and Consumption: Evidence from a Representative Survey of the German Population

Bernd Hayo () and Matthias Uhl ()
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Matthias Uhl: University of Marburg

MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: Using a representative survey of the German population, this paper studies individual consumption responses to a recent payroll tax reduction. Our results show that 55% of the respondents spend the extra money, indicating considerable potential for tax changes to affect consumption and economic activity. Our analysis of the socio-demographic and economic determinants of consumption responses suggests that temporary and permanent tax changes have a similar impact, that interest rates are an important determinant of consumption responses to tax changes, and that households with higher income have a higher propensity to consume.

Keywords: Survey; evidence; Fiscal; policy; Public; debt; Public; preferences; Consumption; Labour; supply (search for similar items in EconPapers)
JEL-codes: E21 E62 H30 J22 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2014
New Economics Papers: this item is included in nep-eec, nep-mac and nep-pbe
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http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/20-2014_hayo.pdf First 201420 (application/pdf)

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Journal Article: Taxation and consumption: evidence from a representative survey of the German population (2017) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:201420

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