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Will inflation eat up the tax cut bonus?

Author

Listed:
  • Wolfgang Nierhaus

Abstract

The tax burden on private households will be reduced this year by about DM 25 billion, and disposable income and with it new scope for spending will increase by a similar amount. Thus far, however, hopes that the expansion of private spending would boost the economy have been dashed. The primary reason is the unexpectedly strong increase in inflation. On the whole, this year's tax cut will have no great impact on consumption. Instead, a large portion of the tax cut will go to offsetting the extra costs that private households will have this year, directly and indirectly, in comparison to last year to pay for price hikes in food and energy.

Suggested Citation

  • Wolfgang Nierhaus, 2001. "Will inflation eat up the tax cut bonus?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 54(12), pages 49-51, October.
  • Handle: RePEc:ces:ifosdt:v:54:y:2001:i:12:p:49-51
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    File URL: https://www.ifo.de/DocDL/ifosd_2001_12_6.pdf
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    Citations

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    Cited by:

    1. Annette Weichselberger, 2001. "West German industry invests more in 2001 than planned," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 54(14), pages 23-31, October.
    2. Arno Städtler, 2001. "Retailers hopes disappointed - cautious investment activity," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 54(14), pages 32-35, October.
    3. Volker Rußig, 2001. "Construction 2001/02: downturn continues," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 54(18), pages 21-32, October.

    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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