Unconventional Fiscal Policy
Daniel Hoang and
Michael Weber ()
No 24244, NBER Working Papers from National Bureau of Economic Research, Inc
Unconventional fiscal policy uses announcements of future increases in consumption taxes to generate inflation expectations and accelerate consumption expenditure. It is budget neutral and time consistent. We provide preliminary evidence for the effectiveness of such policies using changes in value-added tax (VAT) and household survey data for Poland. We find households increased their inflation expectations and willingness to purchase durables before the increase in VAT. Future research has to ensure income, wealth effects, or intratemporal substitution channels cannot explain these results and ideally exploit exogenous variation in VAT in a fixed nominal interest rate environment.
JEL-codes: D12 D84 D91 E21 E31 E32 E52 E62 (search for similar items in EconPapers)
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Published as Francesco D'Acunto & Daniel Hoang & Michael Weber, 2018. "Unconventional Fiscal Policy," AEA Papers and Proceedings, vol 108, pages 519-23.
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Working Paper: Unconventional fiscal policy (2018)
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