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Preannounced tax cuts and their potential influence on the 2001 recession

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  • R. Andrew Butters
  • Marcelo Veracierto

Abstract

The authors present a model in which anticipated future tax cuts, like those promised during the 2000 U.S. presidential campaign, generate a contraction in economic activity with some of the atypical features observed during the 2001 recession (such as its relatively strong consumption and home investment).

Suggested Citation

  • R. Andrew Butters & Marcelo Veracierto, 2009. "Preannounced tax cuts and their potential influence on the 2001 recession," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 33(Q III), pages 44-60.
    • Handle: RePEc:fip:fedhep:y:2009:i:qiii:p:44-60:n:v.33no.3
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    References listed on IDEAS

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    6. Beaudry, Paul & Portier, Franck, 2007. "When can changes in expectations cause business cycle fluctuations in neo-classical settings?," Journal of Economic Theory, Elsevier, vol. 135(1), pages 458-477, July.
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    Keywords

    Recessions;

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