Titel
When are tax multipliers large?
Abstract
I show that the US tax multiplier depends on the direction of the tax change. The tax multiplier is significantly larger (in absolute value) for tax hikes than for tax cuts – regardless of whether I identify tax shocks via (i) the narrative approach or (ii) sign restrictions. The tax hike multiplier is strongly pro-cyclical, i.e., substantially larger in expansions. Variation in the tax cut multiplier over the business cycle is milder and statistically insignificant. A simple business cycle model with downward nominal wage rigidities can explain these results.
Stichwort
Fiscal policyTax multiplier
Objekt-Typ
Sprache
Englisch [eng]
Persistent identifier
https://phaidra.univie.ac.at/o:2044821
Erschienen in
Titel
Journal of Economic Dynamics and Control
Band
158
ISSN
0165-1889
Erscheinungsdatum
2024
Verlag
Elsevier BV
Erscheinungsdatum
2024
Zugänglichkeit
Rechteangabe
© 2023 The Author(s)

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