Do anticipated tax changes matter? Further evidence from the United Kingdom
AbstractThis paper provides some evidence against the rational expectations-permanent income model of consumption behaviour and the Ricardian Equivalence proposition by testing the responsiveness of spending to the implementation of pre-announced changes in income tax. Extending the work of Summer (1991), a long series of recurrent episodes of this kind is for the U.K (1960-1990) is examined. It is found that consumption expenditure strongly reacts to (pre-announced) fiscally-induced changes in current disposable income. This effect is due to the semi-durable and durable components of spending.
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Bibliographic InfoArticle provided by Elsevier in its journal Ricerche Economiche.
Volume (Year): 48 (1994)
Issue (Month): 2 (June)
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Web page: http://www.elsevier.com/locate/inca/622941
Other versions of this item:
- F Bagliano, 1993. "Do Anticipated Tax Changes Matter? Further Evidence from the United Kingdom," CEP Discussion Papers dp0123, Centre for Economic Performance, LSE.
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