World dividends and tax shocks

This paper presents an analysis of the effect of fiscal policy in Indonesia based on a VAR approach. Fiscal policy shocks are identified as a structural residuals related to unexpected government expenditures and tax revenues. Impulse responses are then used to simulate the dynamic response of key macroeconomics variables of shocks. The analysis shows that GDP responses negatively to tax shocks, and positively to expenditure shock. Moreover, disposable income and private consumptionreact negatively to taxation and positively to government expenditures. Altogether the results are consistent with that of Keynesian models.

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International spillover effects of U.S. tax reforms: evidence from Germany

Oxford Economic Papers ◽

10.1093/oep/gpaa022 ◽

2020 ◽

Author(s):

Désirée I Christofzik ◽

Steffen Elstner

Keyword(s):

German Economy ◽

Spillover Effects ◽

Vector Autoregressions ◽

Negative Effects ◽

Tax Reforms ◽

Positive Effects ◽

Tax Legislation ◽

Tax Shocks ◽

The Impact ◽

Structural Vector

Abstract This paper explores the international transmission of U.S. tax shocks. Using structural vector autoregressions, we study the impact on the German economy and on German tax legislation. Our results suggest that, after a U.S. tax cut, German GDP increases only moderately. Positive effects via the income channel outweigh negative effects stemming from price developments. Significant changes in the transmission channels arise by distinguishing between the types of the U.S. tax shock. German tax policy either reacts with diametric measures, or remains passive when considering the whole sample period. For a sample starting in 1980, we find that, in particular, after U.S. corporate income tax cuts, tax reductions are also implemented in Germany.

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The Aging of the Baby Boomers: Demographics and Propagation of Tax Shocks

American Economic Journal Macroeconomics ◽

10.1257/mac.20160419 ◽

2020 ◽

Vol 12 (2) ◽

pp. 167-193

Author(s):

Domenico Ferraro ◽

Giuseppe Fiori

Keyword(s):

Labor Force ◽

Baby Boomers ◽

Unemployment Rate ◽

Age Groups ◽

Marginal Tax Rate ◽

Structural Shocks ◽

Tax Rate ◽

Tax Shocks ◽

Tax Changes ◽

Tax Cuts

We study how the changing demographic composition of the US labor force has affected the response of the unemployment rate to marginal tax rate shocks. Using narratively identified tax changes as proxies for structural shocks, we establish that the responsiveness of the unemployment rates to tax changes varies significantly across age groups: the unemployment rate response of the young is nearly twice as large as that of the old. This heterogeneity is the channel through which shifts in the age composition of the labor force impact the response of the unemployment rate to tax cuts. We find that the aging of the baby boomers considerably reduces the effects of tax cuts on aggregate unemployment. (JEL E24, E62, H24, H31, J21)

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