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The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States

Listed author(s):
  • Morten Ravn

    (University College London)

  • Karel Mertens

    (Cornell University)

This paper estimates the dynamic effects of changes in taxes in the United States. We dis- tinguish between the effects of changes in personal and corporate income taxes using a new narrative account of federal tax liability changes in these two tax components. We develop an estimator in which narratively identified tax changes are used as proxies for structural tax shocks and apply it to quarterly post WWII US data. We find that short run output effects of tax shocks are large and that it is important to distinguish between different types of taxes when considering their impact on the labor market and the major expenditure components.

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File URL: https://economicdynamics.org/meetpapers/2012/paper_638.pdf
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Paper provided by Society for Economic Dynamics in its series 2012 Meeting Papers with number 638.

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Date of creation: 2012
Handle: RePEc:red:sed012:638
Contact details of provider: Postal:
Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA

Web page: http://www.EconomicDynamics.org/
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