Taxation, Debt and Relative Prices in the Long Run: The Irish Experience

Vahagn Galstyan and Adnan Velic

Economic Papers from Trinity College Dublin, Economics Department

Abstract: This paper investigates the effects of public debt and distortionary labour taxation on the long-run behaviour of Irish relative non-traded goods prices. We highlight that higher public debt, acting through higher taxes, has an equivocal impact on the relative supply of non-traded goods and, correspondingly, relative prices. Our empirical analysis for Ireland suggests that taxes and public debt play significant roles in the long run, comoving negatively with the relative price of non-tradables. Accordingly, shifts in public debt and taxation bear implications for the country's international price competitiveness.

Keywords: labour taxation; distortionary; government spending; public debt; real exchange rate; relative non-traded prices (search for similar items in EconPapers)
JEL-codes: F00 F41 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2016-07
New Economics Papers: this item is included in nep-cse and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Taxation, Debt and Relative Prices in the Long Run: The Irish Experience (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:tcd:tcduee:tep1016

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