The output effects of tax changes: narrative evidence from Spain
This paper estimates the GDP impact of legislated tax changes in Spain using a newly constructed narrative record for the period 1986-2015. Our baseline estimates suggest that a 1% of GDP increase in exogenous taxes depresses output by around 1.3% after one year, this negative effect fading away at more distant horizons. We also find that the effect of changes in indirect taxes are larger and that, following a tax increase, investment reacts more than consumption. Overall, our set of estimates is consistent with negative output effects triggered by tax increases, yet the quantitative effects are subject to non-negligible uncertainty that is refected in wide confidence bands, in line with the extant literature for other countries.
|Date of creation:||May 2017|
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- Carlo Favero & Francesco Giavazzi, 2012.
"Measuring Tax Multipliers: The Narrative Method in Fiscal VARs,"
American Economic Journal: Economic Policy,
American Economic Association, vol. 4(2), pages 69-94, May.
- Carlo Favero & Francesco Giavazzi, 2010. "Measuring Tax Multipliers: The Narrative Method in Fiscal VARs," NBER Chapters,in: Trans-Atlantic Public Economics Seminar (TAPES), Fiscal Policy, pages 69-94 National Bureau of Economic Research, Inc.
- Andrea Pescatori & Daniel Leigh & Jaime Guajardo & Pete Devries, 2011. "A New Action-Based Dataset of Fiscal Consolidation," IMF Working Papers 11/128, International Monetary Fund.
- Sebastian Gechert & Christoph Paetz & Paloma Villanueva, 2016. "Top-Down vs. Bottom-Up? Reconcilling the Effects of Tax and Transfer Shocks on Output," IMK Working Paper 169-2016, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.Full references (including those not matched with items on IDEAS)
- Sebastian Gechert & Christoph Paetz & Paloma Villanueva, 2017. "Top-down vs.Bottom-up? Reconciling the effects of tax and transfer shocks on output," Working Papers 1712, Banco de España;Working Papers Homepage.
- Gechert, Sebastian & Paetz, Christoph & Villanueva, Paloma, 2017. "Top-Down vs. Bottom-Up? Reconciling the Effects of Tax and Transfer Shocks on Output," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168204, Verein für Socialpolitik / German Economic Association.
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