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Economic Stimulus and the Tax Code

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  • James M. Williamson
  • John L. Pender

Abstract

This article investigates the impact of geographically targeted Federal tax relief enacted after Hurricane Katrina in 2005. The relief included provisions to replace lost income, mitigate uninsured losses, and stimulate business activity. Using propensity score and Mahalanobis metric (MM) matching methods, we develop difference-in-differences (DD) estimates of the impacts of these tax incentives on income and employment growth in the Gulf Opportunity Zone. Results show that per capita personal income, including earnings, increased more rapidly in counties treated with the tax provisions than in similar untreated counties, though the results only apply to counties with minimal damage. We do not find strong evidence of impacts on employment or population growth.

Suggested Citation

  • James M. Williamson & John L. Pender, 2016. "Economic Stimulus and the Tax Code," Public Finance Review, , vol. 44(4), pages 415-445, July.
    • Handle: RePEc:sae:pubfin:v:44:y:2016:i:4:p:415-445
    DOI: 10.1177/1091142114557724
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    References listed on IDEAS

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