scholarly journals Empirical Evidence on the Aggregate Effects of Anticipated and Unanticipated US Tax Policy Shocks

2012 ◽  
Vol 4 (2) ◽  
pp. 145-181 ◽  
Author(s):  
Karel Mertens ◽  
Morten O Ravn
Keyword(s):  
Business Cycle ◽  
The United States ◽  
Real Wages ◽  
Hours Worked ◽  
Aggregate Consumption ◽  
Policy Shocks ◽  
Tax Shocks ◽  
Tax Changes ◽  
Anticipation Effects ◽  
Tax Cuts

We provide evidence on the dynamic effects of tax liability changes in the United States. We distinguish between surprise and anticipated tax changes. Preannounced but not yet implemented tax cuts give rise to contractions in output, investment, and hours worked while real wages increase. There are no significant anticipation effects on aggregate consumption. Implemented tax cuts, regardless of their timing, have expansionary effects, on output, consumption, investment, hours worked, and real wages. Results are shown to be robust. Tax shocks are important impulses to the US business cycle and anticipation effects have been important during several business cycle episodes. (JEL E23, E32, E62, H20, H30)

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

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)

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

2013 ◽  
Vol 103 (4) ◽  
pp. 1212-1247 ◽  
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)

The Effects of Tax Shocks on Output: Not So Large, But Not Small Either

2012 ◽  
Vol 4 (2) ◽  
pp. 214-237 ◽  
Author(s):  
Roberto Perotti
Keyword(s):  
Macroeconomic Variables ◽  
Significant Evidence ◽  
Tax Revenues ◽  
Automatic Response ◽  
Tax Shocks ◽  
Tax Changes ◽  
Anticipation Effects

I argue that, on theoretical grounds, the discretionary component of taxation should be allowed to have different effects than the automatic response of tax revenues to macroeconomic variables. Based on a novel dataset, I show two results. First, responses to a tax shock that allow for a distinction between the discretionary and the endogenous components of tax changes are about halfway between the large effects estimated by Romer and Romer (2010) and the smaller effects estimated, for instance, by Favero and Giavazzi (2012) or Blanchard and Perotti (2002). Second, there is almost no statistically significant evidence of anticipation effects. (JEL E23, E62, H22, H24, H25, K34)

scholarly journals Facts and Challenges from the Great Recession for Forecasting and Macroeconomic Modeling

2013 ◽  
Vol 51 (4) ◽  
pp. 1120-1154 ◽  
Author(s):  
Serena Ng ◽  
Jonathan H. Wright
Keyword(s):  
United States ◽  
Business Cycle ◽  
Financial Market ◽  
Great Recession ◽  
The United States ◽  
Monetary Policy Shocks ◽  
The Great Recession ◽  
Macroeconomic Modeling ◽  
Policy Shocks ◽  
Market Factors

This paper provides a survey of business cycle facts, updated to take account of recent data. Emphasis is given to the Great Recession, which was unlike most other postwar recessions in the United States in being driven by deleveraging and financial market factors. We document how recessions with financial market origins are different from those driven by supply or monetary policy shocks. This helps explain why economic models and predictors that work well at some times do poorly at other times. We discuss challenges for forecasters and empirical researchers in light of the updated business cycle facts.

scholarly journals The Macroeconomic Effects of Income and Consumption Tax Changes

2021 ◽  
Vol 13 (2) ◽  
pp. 439-466
Author(s):  
Anh D.M. Nguyen ◽  
Luisanna Onnis ◽  
Raffaele Rossi
Keyword(s):  
Income Tax ◽  
Transmission Mechanism ◽  
Consumption Tax ◽  
Indirect Taxation ◽  
The United Kingdom ◽  
Tax Shocks ◽  
Tax Changes ◽  
Consumption Taxes ◽  
Narrative Account ◽  
Tax Cuts

This paper estimates the effects of exogenous changes in income and consumption taxes. The tax shocks are proxied with a narrative account of tax liability changes in the United Kingdom. Income tax cuts have large effects on GDP, private consumption, and investment. The effects of consumption tax cuts are modest and not statistically significant on GDP and its components. Shifting the burden of taxation from income to consumption is expansionary. Consistent with conventional public finance theories, these results indicate that it is crucial to distinguish between direct and indirect taxation when studying the transmission mechanism of fiscal policy. (JEL E21, E22, E23, H24, H25)

scholarly journals Asymmetric dynamics between uncertainty and unemployment flows in the United States

2020 ◽  
Vol 0 (0) ◽  
Author(s):  
Ali Ahmed ◽  
Mark Granberg ◽  
Victor Troster ◽  
Gazi Salah Uddin
Keyword(s):  
United States ◽  
Business Cycle ◽  
Negative Impact ◽  
The United States ◽  
Large Uncertainty ◽  
Monthly Data ◽  
Uncertainty Measures ◽  
Linear And Nonlinear ◽  
The Business Cycle ◽  
The U.S

AbstractThis paper examines how different uncertainty measures affect the unemployment level, inflow, and outflow in the U.S. across all states of the business cycle. We employ linear and nonlinear causality-in-quantile tests to capture a complete picture of the effect of uncertainty on U.S. unemployment. To verify whether there are any common effects across different uncertainty measures, we use monthly data on four uncertainty measures and on U.S. unemployment from January 1997 to August 2018. Our results corroborate the general predictions from a search and matching framework of how uncertainty affects unemployment and its flows. Fluctuations in uncertainty generate increases (upper-quantile changes) in the unemployment level and in the inflow. Conversely, shocks to uncertainty have a negative impact on U.S. unemployment outflow. Therefore, the effect of uncertainty is asymmetric depending on the states (quantiles) of U.S. unemployment and on the adopted unemployment measure. Our findings suggest state-contingent policies to stabilize the unemployment level when large uncertainty shocks occur.

scholarly journals Long-Term Employment Outcomes among Female Cancer Survivors

2020 ◽  
Vol 17 (8) ◽  
pp. 2751 ◽  
Author(s):  
Christine C. Ekenga ◽  
Eunsun Kwon ◽  
BoRin Kim ◽  
Sojung Park
Keyword(s):  
Cancer Survivors ◽  
Employment Status ◽  
The United States ◽  
Employment Outcomes ◽  
Hours Worked ◽  
Professional Workers ◽  
Working Age ◽  
The Impact ◽  
Female Cancer Survivors

Advances in early detection and treatment have led to a growing population of female cancer survivors, many of whom are of working age. We examined the relationship between cancer and long-term (>5 years) employment outcomes in a nationally representative sample of working-age women in the United States. Data from nine waves of the Health and Retirement Study were used to examine employment status and weekly hours worked among cancer survivors (n = 483) and women without cancer (n = 6605). We used random slope regression models to estimate the impact of cancer and occupation type on employment outcomes. There was no difference in employment status between cancer survivors and women without cancer at baseline; however, during follow-up, cancer survivors were more likely to be employed than women without cancer (odds ratio (OR) = 1.33, 95% confidence interval (CI): 1.11–1.58). Among 6–10-year survivors, professional workers were less likely (OR = 0.40, 95% CI: 0.21–0.74) to be employed than manual workers. Among >10-year survivors, professional workers averaged fewer weekly hours worked (−2.4 h, 95% CI: −4.4–−0.47) than manual workers. The impact of cancer on long-term employment outcomes may differ by occupation type. Identifying the occupation-specific mechanisms associated with the return to work will be critical to developing targeted strategies to promote employment in the growing female cancer survivor population.

THE HOURS WORKED–PRODUCTIVITY PUZZLE: IDENTIFICATION IN A FRACTIONAL INTEGRATION SETTING

2014 ◽  
Vol 19 (7) ◽  
pp. 1593-1621 ◽  
Author(s):  
Yuliya Lovcha ◽  
Alejandro Perez-Laborda
Keyword(s):  
Business Cycle ◽  
Fractional Integration ◽  
Real Business Cycle ◽  
Data Sets ◽  
Sampling Uncertainty ◽  
Hours Worked ◽  
Long Run ◽  
The Hours ◽  
Short Run ◽  
Technology Shock

A recent finding of the SVAR literature is that the response of hours worked to a (positive) technology shock depends on the assumed order of integration of the hours. In this work we relax this assumption, allowing fractional integration in hours and productivity. We find that the sign and magnitude of the estimated responses depend crucially on the identification assumptions employed. Although the responses of hours recovered with short-run (SR) restrictions are positive in all data sets, long-run (LR) identification results in negative, although sometimes not significant responses. We check the validity of these assumptions with the Sims procedure, concluding that both LR and SR are appropriate to recover responses in a fractionally integrated VAR. However, the application of the LR scheme always results in an increase in sampling uncertainty. Results also show that even the negative responses found in the data could still be compatible with real business cycle models.

Sign in / Sign up

Export Citation Format

Share Document