IDEAS home Printed from https://ideas.repec.org/a/eee/pubeco/v258y2026ics0047272726000794.html

Identifying tax-setting responses from local fiscal policy programs

Author

Listed:
  • Thunecke, Georg U.
  • Merlo, Valeria
  • Schanbacher, Andreas
  • Wamser, Georg

Abstract

This paper provides event-study evidence on the dynamics of strategic tax-policy interactions. Using the participation of German municipalities in state debt reduction programs as a quasi-exogenous shock, we demonstrate how these programs affect tax rates of participating municipalities. We then illustrate how competing municipalities – not directly affected by the program – adjust their tax rates in response. Combining both steps using a two-sample Wald estimator, the strategic response of competitors to a one-unit tax change by program participants ranges from 0.66 to 0.70 for the local business tax and 0.34 to 0.49 for the property tax. Characteristics of municipalities, especially proximity, influence the size and scope of tax interdependence.

Suggested Citation

  • Thunecke, Georg U. & Merlo, Valeria & Schanbacher, Andreas & Wamser, Georg, 2026. "Identifying tax-setting responses from local fiscal policy programs," Journal of Public Economics, Elsevier, vol. 258(C).
    • Handle: RePEc:eee:pubeco:v:258:y:2026:i:c:s0047272726000794
    DOI: 10.1016/j.jpubeco.2026.105643
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0047272726000794
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jpubeco.2026.105643?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • R59 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Other

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:258:y:2026:i:c:s0047272726000794. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505578 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.