Ravn, MO and Mertens, K (2013) The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States. (CEPR Discussion Paper ). Forthcoming, American Economic Review, June 2013: Forthcoming, American Economic Review.
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Abstract
This paper estimates the dynamic effects of changes in taxes in the United States. We distinguish 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.
| Type: | Working / discussion paper |
|---|---|
| Title: | The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States |
| Keywords: | Fiscal Policy, Tax changes, Vector autoregressions, narrative identification, measurement error |
| UCL classification: | UCL > School of Arts and Social Sciences > Faculty of Social and Historical Sciences > Economics |
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