Arbeitspapier
State-dependent effects of tax changes in Germany and the United Kingdom
We study state-dependent effects of narratively identified tax shocks in Germany and the UK over the period 1974Q1-2018Q4 using local projections. In addition, we distinguish between aggregated and disaggregated tax types (direct and indirect taxes) as well as look for possible asymmetries between tax hikes and tax cuts. We find a number of differences across the business cycle, and between sample countries, tax types, and direction of tax changes. For instance, aggregated tax cuts initially have a larger effect during times of nonrecession in Germany, whereas we find no state-dependent effects for the UK. When disaggregating tax types, German indirect tax cuts only appear expansionary during downturns, whereas the effect is positive throughout the business cycle in the UK. Furthermore, we find different reactions when considering tax cuts and hikes individually: tax hikes can be expansionary in Germany (UK) when implemented during non-recessionary (recessionary) periods whereas they are contractionary during recessions (non-recessions). When considering tax cuts, German GDP rises only when cuts are enacted in times of non-recession, whereas in the UK, the reactions is positive in either case and mostly symmetric. All these findings are robust to various changes in the econometric setup.
- Sprache
-
Englisch
- Erschienen in
-
Series: MAGKS Joint Discussion Paper Series in Economics ; No. 25-2021
- Klassifikation
-
Wirtschaft
Fiscal Policy
Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
Taxation, Subsidies, and Revenue: General
Fiscal Policies and Behavior of Economic Agents: General
Tax Law
- Thema
-
Fiscal policy
tax policy
legislated tax changes
state dependence
direct taxes
indirect taxes
asymmetric effects
Germany
United Kingdom
local projections
narrative approach
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Hayo, Bernd
Mierzwa, Sascha
- Ereignis
-
Veröffentlichung
- (wer)
-
Philipps-University Marburg, School of Business and Economics
- (wo)
-
Marburg
- (wann)
-
2021
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:43 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Hayo, Bernd
- Mierzwa, Sascha
- Philipps-University Marburg, School of Business and Economics
Entstanden
- 2021
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