Positive and Normative Judgments Implicit in U.S. Tax Policy, and the Costs of Unequal Growth and Recessions

Benjamin Lockwood and Matthew Weinzierl ()

No 21927, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Calculating the welfare implications of changes to economic policy or shocks requires economists to decide on a normative criterion. One approach is to elicit the relevant moral criteria from real-world policy choices, converting a normative decision into a positive inference, as in the recent surge of "inverse-optimum" research. We find that capitalizing on the potential of this approach is not as straightforward as we might hope. We perform the inverse-optimum inference on U.S. tax policy from 1979 through 2010 and argue that the results either undermine the normative relevance of the approach or challenge conventional assumptions upon which economists routinely rely when performing welfare evaluations.

JEL-codes: D63 E32 H21 (search for similar items in EconPapers)
Date: 2016-01
New Economics Papers: this item is included in nep-mac and nep-pbe
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Citations: View citations in EconPapers (61)

Published as Journal of Monetary Economics, Volume 77, February 2016, Pages 30–47

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Related works:
Journal Article: Positive and normative judgments implicit in U.S. tax policy, and the costs of unequal growth and recessions (2016)
Working Paper: Positive and Normative Judgments Implicit in U.S. Tax Policy, and the Costs of Unequal Growth and Recessions (2014)
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