A Temporary Tax Rebate in a Recession: Is it Effective and Safe?
AbstractIs a temporary tax rebate effective and safe as an antirecession policy? Simulations with an empirically tested macroeconometric model are used to estimate the impact of the actual one-time 2001 tax rebate in the United States and of a hypothetical rebate twice as large, injected four times (quarterly). The results of the simulations are interpreted in light of two important recent empirical studies of the spending of the 2001 rebate by households. We estimate that a rebate equal to three percent of quarterly GDP (roughly the size of the 2001 rebate) repeated four times (quarterly) would reduce the unemployment rate at the end of a year by one percentage point (for example, from six percent to five percent). As along as a tax rebate is detriggered when the recession ends, its use during a recession does not pose a significant debt or inflation problem.Business Economics (2006) 41, 30–39; doi:10.2145/20060303
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Palgrave Macmillan in its journal Business Economics.
Volume (Year): 41 (2006)
Issue (Month): 3 (July)
Contact details of provider:
Web page: http://www.palgrave-journals.com/
Postal: Palgrave Macmillan Journals, Subscription Department, Houndmills, Basingstoke, Hampshire RG21 6XS, UK
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Kenneth Lewis & Laurence Seidman, 2006.
"Overcoming the Zero Interest-Rate Bound: A Quantitative Prescription,"
06-14, University of Delaware, Department of Economics.
- Lewis, Kenneth A. & Seidman, Laurence S., 2008. "Overcoming the zero interest-rate bound: A quantitative prescription," Journal of Policy Modeling, Elsevier, vol. 30(5), pages 751-760.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Elizabeth Gale).
If references are entirely missing, you can add them using this form.