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Tax Revenue Elasticities Corrected for Policy Changes in the EU

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  • Gilles Mourre
  • Savina Princen

Abstract

This paper investigates how tax revenue elasticities develop with respect to their tax base and analyses the specific impact of the business cycle. The main novelty of the paper is to use revenue data net of discretionary tax measures. Based on an EU country panel for the period 2001-13, we estimate short-term and long-term revenue elasticities for different revenue categories. Then, we add different indicators of the business cycle to test its specific influence on the short-term dynamics of revenue-to-base elasticities. A specific impact of the business cycle is found for all revenue categories, except for consumption taxes.

Suggested Citation

  • Gilles Mourre & Savina Princen, 2015. "Tax Revenue Elasticities Corrected for Policy Changes in the EU," CESifo Working Paper Series 5657, CESifo.
    • Handle: RePEc:ces:ceswps:_5657
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    References listed on IDEAS

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    Cited by:

    1. Bernd Hayo & Sascha Mierzwa & Umut Ünal, 2023. "Estimating policy-corrected long-term and short-term tax elasticities for the USA, Germany, and the United Kingdom," Empirical Economics, Springer, vol. 64(1), pages 465-504, January.
    2. Sean Dougherty & Pietrangelo Biase, 2021. "Who absorbs the shock? An analysis of the fiscal impact of the COVID-19 crisis on different levels of government," International Economics and Economic Policy, Springer, vol. 18(3), pages 517-540, July.
    3. Gilles Mourre & Aurélien Poissonnier, 2019. "What Drives the Responsiveness of the Budget Balance to the Business Cycle in EU Countries?," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 54(4), pages 237-249, July.
    4. Koester, Gerrit & Priesmeier, Christoph, 2017. "Revenue elasticities in euro area countries," Working Paper Series 1989, European Central Bank.
    5. Bernd Hayo & Sascha Mierzwa & Umut Unal, 2021. "Estimating Policy-Corrected Long-Term and Short-Term Tax Elasticities for the United States, Germany, and the United Kingdom," MAGKS Papers on Economics 202112, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    6. Marius Clemens & Werner Röger, 2022. "Durable Consumption, Limited VAT Pass-Through and Stabilization Effects of Temporary VAT Changes," Discussion Papers of DIW Berlin 2004, DIW Berlin, German Institute for Economic Research.
    7. Francesco Berardini & Fabrizio Renzi, 2022. "Mind the Gap! The (unexpected) impact of COVID-19 pandemic on VAT revenue in Italy," Questioni di Economia e Finanza (Occasional Papers) 669, Bank of Italy, Economic Research and International Relations Area.
    8. Marius Clemens & Werner Röger, 2021. "Temporary VAT Reduction during the Lockdown," Discussion Papers of DIW Berlin 1944, DIW Berlin, German Institute for Economic Research.
    9. Clemens, Marius & Röger, Werner, 2021. "Temporary VAT Reduction during the Lockdown - Evidence from Germany," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242459, Verein für Socialpolitik / German Economic Association.
    10. Alina Georgeta AILINCA, 2022. "Assessing Some Fiscal Indicators In The European Union In The Period 2000-2021," Contemporary Economy Journal, Constantin Brancoveanu University, vol. 7(1), pages 28-37.

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    More about this item

    Keywords

    fiscal policy; budget balance; revenue elasticity; cyclical adjustment; tax measures;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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