Empirical evidence on the aggregate effects of anticipated and unanticipated US tax policy shocks

Karel Mertens and Morten Ravn

No 181, Working Paper Research from National Bank of Belgium

Abstract: The authors provide empirical evidence on the dynamic effects of tax liability changes in the United States. We distinguish between surprise and anticipated tax changes using a timing convention. We document that pre-announced but not yet implemented tax cuts give rise to contractions in output, investment and hours worked, while real wages increase. In contrast, there are no significant anticipation effects on aggregate consumption. Implemented tax cuts, regardless of their timing, have expansionary and persistent effects on output, consumption, investment, hours worked and real wages. The findings are shown to be very robust. We argue that tax shocks are empirically important impulses to the US business cycle and that anticipation effects have been significant over several business cycle episodes

Keywords: fiscal policy shocks; tax liabilities; anticipation effects; business cycles (search for similar items in EconPapers)
JEL-codes: E20 E32 E62 H30 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2009-11
New Economics Papers: this item is included in nep-bec, nep-cba, nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

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https://www.nbb.be/doc/ts/publications/wp/wp181en.pdf (application/pdf)

Related works:
Journal Article: Empirical Evidence on the Aggregate Effects of Anticipated and Unanticipated US Tax Policy Shocks (2012)
Chapter: Empirical Evidence on the Aggregate Effects of Anticipated and Unanticipated US Tax Policy Shocks (2010)
Working Paper: Empirical Evidence on the Aggregate Effects of Anticipated and Unanticipated U.S. Tax Policy Shocks (2010)
Working Paper: Empirical Evidence on the Aggregate Effects of Anticipated and Unanticipated U.S. Tax Policy Shocks (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:nbb:reswpp:200911-13

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