Macroeconomic Effects of the Anticipation and Implementation of Tax Changes in Germany: Evidence from a Narrative Account

In this reply to a comment by Jentsch and Lunsford, we show that the evidence for economic and statistically significant macroeconomic effects of tax changes in Mertens and Ravn (2013) remains present for a range of asymptotically valid inference methods. (JEL E23, E62, H24, H25, H31, H32)

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Transfer Payments and the Macroeconomy: The Effects of Social Security Benefit Increases, 1952–1991

American Economic Journal Macroeconomics ◽

10.1257/mac.20140348 ◽

2016 ◽

Vol 8 (4) ◽

pp. 1-42 ◽

Cited By ~ 7

Author(s):

Christina D. Romer ◽

David H. Romer

Keyword(s):

Monetary Policy ◽

Social Security ◽

Industrial Production ◽

Positive Response ◽

Social Security Benefit ◽

Transfer Payments ◽

Macroeconomic Effects ◽

Tax Changes

This paper uses Social Security benefit increases from 1952 to 1991 to investigate the macroeconomic effects of changes in transfers. It finds a large, immediate, and significant positive response of consumption to permanent benefit increases. The response declines after about five months, and does not appear to spread to industrial production or employment. The effects of transfers are faster, but much less persistent and much smaller overall, than those of tax changes. Finally, monetary policy responds strongly to benefit increases but not to tax changes. This may account for the failure of the effects of transfers to persist or spread. (JEL E21, E62, E63, H31, H55)

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Discretionary Tax Changes and the Macroeconomy: New Narrative Evidence from the United Kingdom

The American Economic Review ◽

10.1257/aer.103.4.1507 ◽

2013 ◽

Vol 103 (4) ◽

pp. 1507-1528 ◽

Cited By ~ 74

Author(s):

James Cloyne

Keyword(s):

United States ◽

United Kingdom ◽

The United States ◽

Policy Changes ◽

Narrative Strategy ◽

The United Kingdom ◽

Macroeconomic Effects ◽

The Uk ◽

Tax Changes ◽

Strategy I

This paper provides new estimates of the macroeconomic effects of tax changes using a new narrative dataset for the United Kingdom. Identification is achieved by isolating “exogenous” tax policy changes using the Romer and Romer narrative strategy. I find that a 1 percent cut in taxes increases GDP by 0.6 percent on impact and 2.5 percent over three years. The findings are remarkably similar to Romer and Romer narrative estimates for the United States, reinforcing the view that tax changes have powerful and persistent effects. “Exogenous” tax changes are also shown to have contributed to important episodes in the UK business cycle. (JEL E23, E32, E62, H20, H61)

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The macroeconomic effects of legislated tax changes in Germany

Oxford Economic Papers ◽

10.1093/oep/gpt017 ◽

2013 ◽

Vol 66 (2) ◽

pp. 397-418 ◽

Cited By ~ 20

Author(s):

B. Hayo ◽

M. Uhl

Keyword(s):

Macroeconomic Effects ◽

Tax Changes

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The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States

The American Economic Review ◽

10.1257/aer.103.4.1212 ◽

2013 ◽

Vol 103 (4) ◽

pp. 1212-1247 ◽

Cited By ~ 242

Author(s):

Karel Mertens ◽

Morten O Ravn

Keyword(s):

United States ◽

Income Tax ◽

The United States ◽

Income Taxes ◽

Dynamic Effects ◽

Different Types ◽

Short Run ◽

Tax Shocks ◽

Tax Changes ◽

Narrative Account

This paper estimates the dynamic effects of changes in taxes in the United States. We distinguish between changes in personal and corporate income taxes and develop a new narrative account of federal tax liability changes in these two tax components. We develop an estimator which uses narratively identified tax changes as proxies for structural tax shocks and apply it to quarterly post-WWII data. We find that short run output effects of tax shocks are large and that it is important to distinguish between different types of taxes when considering their impact on the labor market and on expenditure components. (JEL E23, E62, H24, H25, H31, H32)

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