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The Tax-smoothing Hypothesis: Evidence from Sweden, 1952-1999

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  • Johan Adler
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    Abstract

    This paper tests Barro's (1979) tax-smoothing hypothesis using Swedish central government data for the period 1952-1999. According to the tax-smoothing hypothesis, the government sets the budget surplus equal to expected changes in government expenditure. When expenditure is expected to increase, the government runs a budget surplus, and when expenditure is expected to fall, the government runs a budget deficit. The empirical evidence suggests that the model provides a useful benchmark and that tax-smoothing behavior can explain about 60 percent of the variability in the Swedish central government budget surplus. Copyright The editors of the "Scandinavian Journal of Economics", 2006 .

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    Bibliographic Info

    Article provided by Wiley Blackwell in its journal The Scandinavian Journal of Economics.

    Volume (Year): 108 (2006)
    Issue (Month): 1 (03)
    Pages: 81-95

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    Handle: RePEc:bla:scandj:v:108:y:2006:i:1:p:81-95

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    Cited by:
    1. Gerhard Reitschuler, 2010. "Fiscal Policy And Optimal Taxation: Evidence From A Tax Smoothing Exercise," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(2), pages 238-252, 05.
    2. Ananda Jayawickrama & Tilak Abeysinghe, 2013. "The experience of some OECD economies on tax smoothing," Applied Economics, Taylor & Francis Journals, vol. 45(16), pages 2305-2313, June.
    3. Luo, Yulei & Nie, Jun & Young, Eric, 2014. "Model Uncertainty and Intertemporal Tax Smoothing," MPRA Paper 54268, University Library of Munich, Germany.

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