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The Tax-smoothing Hypothesis: Evidence from Sweden, 1952-1999

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  • Johan Adler

Abstract

This paper tests Barro's (1979) tax-smoothing hypothesis using Swedish central government data for the period 1952-1999. According to the tax-smoothing hypothesis, the government sets the budget surplus equal to expected changes in government expenditure. When expenditure is expected to increase, the government runs a budget surplus, and when expenditure is expected to fall, the government runs a budget deficit. The empirical evidence suggests that the model provides a useful benchmark and that tax-smoothing behavior can explain about 60 percent of the variability in the Swedish central government budget surplus. Copyright The editors of the "Scandinavian Journal of Economics", 2006 .

Suggested Citation

  • Johan Adler, 2006. "The Tax-smoothing Hypothesis: Evidence from Sweden, 1952-1999," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(1), pages 81-95, March.
  • Handle: RePEc:bla:scandj:v:108:y:2006:i:1:p:81-95
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    References listed on IDEAS

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    Cited by:

    1. Luo, Yulei & Nie, Jun & Young, Eric R., 2014. "Model uncertainty and intertemporal tax smoothing," Journal of Economic Dynamics and Control, Elsevier, vol. 45(C), pages 289-314.
    2. Ananda Jayawickrama & Tilak Abeysinghe, 2013. "The experience of some OECD economies on tax smoothing," Applied Economics, Taylor & Francis Journals, vol. 45(16), pages 2305-2313, June.
    3. Gerhard Reitschuler, 2010. "Fiscal Policy And Optimal Taxation: Evidence From A Tax Smoothing Exercise," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(2), pages 238-252, May.
    4. repec:pje:journl:article10iv is not listed on IDEAS

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