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Economic effects of an earlier implementation of German tax reform

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  • Tobias Seidel
  • Frank Westermann

Abstract

On 19 December 2003 a parliamentary conference committee agreed to a partial earlier implementation of the third stage of the tax reform from 2005 to 2004, which will save taxpayers €9 billion. In this contribution Tobias Seidel and Dr. Frank Westermann, Munich University, show what effects this tax reduction will have on the gross domestic product and by how much GDP will increase in the following years. In the first years the tax reduction will have a positive growth effect on GDP of 0.2-0.5%; the negative effects of financing these cuts will prevail in the medium term. From 2007 the measures decided in December will have contractive effects

Suggested Citation

  • Tobias Seidel & Frank Westermann, 2004. "Economic effects of an earlier implementation of German tax reform," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 57(01), pages 25-30, January.
    • Handle: RePEc:ces:ifosdt:v:57:y:2004:i:01:p:25-30
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    References listed on IDEAS

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    1. Willi Leibfritz & Rolf Horst Dumke & Albert Müller & Wolfgang Ochel & Michael Reutter & Frank Westermann, 2001. "Fiscal Policy and the European Stability and Growth Pact: Between macroeconomic necessities and economic- and fiscal-policy requirements," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 5.
    2. Olivier Blanchard & Roberto Perotti, 2002. "An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(4), pages 1329-1368.
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    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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