Do Temporary Business Tax Cuts Matter A General Equilibrium Analysis

Author : William Gbohoui
Publisher : International Monetary Fund
Page : 39 pages
File Size : 51,5 Mb
Release : 2019-02-15
Category : Business & Economics
ISBN : 9781498301039

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Do Temporary Business Tax Cuts Matter? A General Equilibrium Analysis by William Gbohoui Pdf

This paper develops a dynamic general equilibrium model to assess the effects of temporary business tax cuts. First, the analysis extends the Ricardian equivalence result to an environment with production and establishes that a temporary tax cut financed by a future tax-increase has no real effect if the tax is lump-sum and capital markets are perfect. Second, it shows that in the presence of financing frictions which raise the cost of investment, the policy temporarily relaxes the financing constraint thereby reducing the marginal cost of investment. This direct effect implies positive marginal propensities to invest out of tax cuts. Third, when the tax is distortionary, the expectation of high future tax rates reduces the expected marginal return on investment mitigating the direct stimulative effects.

Author : William Gbohoui
Publisher : International Monetary Fund
Page : 39 pages
File Size : 41,9 Mb
Release : 2019-02-15
Category : Business & Economics
ISBN : 9781484393895

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Do Temporary Business Tax Cuts Matter? A General Equilibrium Analysis by William Gbohoui Pdf

This paper develops a dynamic general equilibrium model to assess the effects of temporary business tax cuts. First, the analysis extends the Ricardian equivalence result to an environment with production and establishes that a temporary tax cut financed by a future tax-increase has no real effect if the tax is lump-sum and capital markets are perfect. Second, it shows that in the presence of financing frictions which raise the cost of investment, the policy temporarily relaxes the financing constraint thereby reducing the marginal cost of investment. This direct effect implies positive marginal propensities to invest out of tax cuts. Third, when the tax is distortionary, the expectation of high future tax rates reduces the expected marginal return on investment mitigating the direct stimulative effects.

Author : Mr. Nicolas End,Mr. Gee Hee Hong
Publisher : International Monetary Fund
Page : 59 pages
File Size : 40,7 Mb
Release : 2022-02-18
Category : Business & Economics
ISBN : 9798400200748

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Trust What You Hear: Policy Communication, Expectations, and Fiscal Credibility by Mr. Nicolas End,Mr. Gee Hee Hong Pdf

How do policy communications on future f iscal targets af fect market expectations and beliefs about the future conduct of f iscal policy? In this paper, we develop indicators of f iscal credibility that quantify the degree to which policy announcements anchor expectations, based on the deviation of private expectations f rom official targets, for 41 countries. We find that policy announcements partly re-anchor expectations and that f iscal rules and strong fiscal institutions, as well as a good policy track record, contribute to magnifying this effect, thereby improving fiscal credibility. Conversely, empirical analysis suggests that markets reward credibility with more favorable sovereign financing conditions.

Author : International Monetary Fund. Research Dept.
Publisher : International Monetary Fund
Page : 228 pages
File Size : 44,7 Mb
Release : 1988-01-01
Category : Business & Economics
ISBN : 9781451956771

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IMF Staff papers by International Monetary Fund. Research Dept. Pdf

A central proposition regarding effects of different mechanisms of fi-nancing public expenditures is that, under specific circumstances, it makes no difference to the level of aggregate demand if the government finances its outlays by debt or taxation. This so-called Ricardian equivalence states that, for a given expenditure path, substitution of debt for taxes does not affect private sector wealth and consumption. This paper provides a model illustrating the implications of Ricardian equivalence, surveys the litera-ture, considers effects of relaxing the basic assumptions, provides a frame-work to study implications of various extensions, and critically reviews recent empirical work on Ricardian equivalence.

Author : Mr.Daniel Leigh,Mr.Andrea Pescatori,Mr.Jaime Guajardo
Publisher : International Monetary Fund
Page : 41 pages
File Size : 48,7 Mb
Release : 2011-07-01
Category : Business & Economics
ISBN : 9781455294695

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Expansionary Austerity New International Evidence by Mr.Daniel Leigh,Mr.Andrea Pescatori,Mr.Jaime Guajardo Pdf

This paper investigates the short-term effects of fiscal consolidation on economic activity in OECD economies. We examine the historical record, including Budget Speeches and IMFdocuments, to identify changes in fiscal policy motivated by a desire to reduce the budget deficit and not by responding to prospective economic conditions. Using this new dataset, our estimates suggest fiscal consolidation has contractionary effects on private domestic demand and GDP. By contrast, estimates based on conventional measures of the fiscal policy stance used in the literature support the expansionary fiscal contractions hypothesis but appear to be biased toward overstating expansionary effects.

Author : Richard Hemming,Selma Mahfouz,Michael Kell
Publisher : International Monetary Fund
Page : 60 pages
File Size : 51,7 Mb
Release : 2002-12
Category : Business & Economics
ISBN : UCSD:31822032179210

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The Effectiveness of Fiscal Policy in Stimulating Economic Activity by Richard Hemming,Selma Mahfouz,Michael Kell Pdf

This paper reviews the theoretical and empirical literature on the effectiveness of fiscal policy. The focus is on the size of fiscal multipliers, and on the possibility that multipliers can turn negative (i.e., that fiscal contractions can be expansionary). The paper concludes that fiscal multipliers are overwhelmingly positive but small. However, there is some evidence of negative fiscal multipliers.

Author : Fischer Black
Publisher : John Wiley & Sons
Page : 224 pages
File Size : 46,7 Mb
Release : 2009-11-02
Category : Business & Economics
ISBN : 9780470499177

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Business Cycles and Equilibrium by Fischer Black Pdf

An updated look at what Fischer Black's ideas on business cycles and equilibrium mean today Throughout his career, Fischer Black described a view of business fluctuations based on the idea that a well-developed economy will be continually in equilibrium. In the essays that constitute this book, which is one of only two books Black ever wrote, he explores this idea thoroughly and reaches some surprising conclusions. With the newfound popularity of quantitative finance and risk management, the work of Fischer Black has garnered much attention. Business Cycles and Equilibrium-with its theory that economic and financial markets are in a continual equilibrium-is one of his books that still rings true today, given the current economic crisis. This Updated Edition clearly presents Black's classic theory on business cycles and the concept of equilibrium, and contains a new introduction by the person who knows Black best: Perry Mehrling, author of Fischer Black and the Revolutionary Idea of Finance (Wiley). Mehrling goes inside Black's life to uncover what was occurring during the time Black wrote Business Cycles and Equilibrium, while also shedding light on what Black would make of today's financial and economic meltdown and how he would best advise to move forward. The essays within this book reach some interesting conclusions concerning the role of equilibrium in a developed economy Warns about the use and abuse of modeling Explains the risky business of risk in a straightforward and accessible style Contains chapters dedicated to "the effects of uncontrolled banking," "the trouble with econometric models," and "the effects of noise on investing" Includes commentary on Black's life and work at the time Business Cycles and Equilibrium was written as well as insight as to what Black would make of the current financial meltdown Engaging and informative, the Updated Edition of Business Cycles and Equilibrium will give you a better understanding of what is really going on during these uncertain and volatile financial times.

Author : Ms.Dora Benedek,Ruud A. de Mooij,Mr.Philippe Wingender
Publisher : International Monetary Fund
Page : 41 pages
File Size : 44,8 Mb
Release : 2015-09-30
Category : Business & Economics
ISBN : 9781513586359

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Estimating VAT Pass Through by Ms.Dora Benedek,Ruud A. de Mooij,Mr.Philippe Wingender Pdf

This paper estimates the pass through of VAT changes to consumer prices, using a unique dataset providing disaggregated, monthly data on prices and VAT rates for 17 Eurozone countries over 1999-2013. Pass through is much less than full on average, and differs markedly across types of VAT change. For changes in the standard rate, for instance, final pass through is about 100 percent; for reduced rates it is significantly less, at around 30 percent; and for reclassifications it is essentially zero. We also find: differing dynamics of pass through for durables and non-durables; no significant difference in pass through between rate increases and decreases; signs of non-monotonicity in the relationship between pass through and the breadth of the consumption base affected; and indications of significant anticipation effects together with some evidence of lagged effects in the two years around reform. The results are robust against endogeneity and attenuation bias.

Author : Ms.Valerie Cerra,A. Fatas,Ms.Sweta Chaman Saxena
Publisher : International Monetary Fund
Page : 50 pages
File Size : 55,6 Mb
Release : 2020-05-29
Category : Business & Economics
ISBN : 9781513536996

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Hysteresis and Business Cycles by Ms.Valerie Cerra,A. Fatas,Ms.Sweta Chaman Saxena Pdf

Traditionally, economic growth and business cycles have been treated independently. However, the dependence of GDP levels on its history of shocks, what economists refer to as “hysteresis,” argues for unifying the analysis of growth and cycles. In this paper, we review the recent empirical and theoretical literature that motivate this paradigm shift. The renewed interest in hysteresis has been sparked by the persistence of the Global Financial Crisis and fears of a slow recovery from the Covid-19 crisis. The findings of the recent literature have far-reaching conceptual and policy implications. In recessions, monetary and fiscal policies need to be more active to avoid the permanent scars of a downturn. And in good times, running a high-pressure economy could have permanent positive effects.

Author : David Ricardo
Publisher : Unknown
Page : 566 pages
File Size : 40,7 Mb
Release : 1821
Category : Economics
ISBN : OXFORD:300151240

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On the Principles of Political Economy, and Taxation by David Ricardo Pdf

Author : Sebastian Edwards,Jeffrey A. Frankel
Publisher : University of Chicago Press
Page : 783 pages
File Size : 52,6 Mb
Release : 2009-02-15
Category : Business & Economics
ISBN : 9780226185057

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Preventing Currency Crises in Emerging Markets by Sebastian Edwards,Jeffrey A. Frankel Pdf

Economists and policymakers are still trying to understand the lessons recent financial crises in Asia and other emerging market countries hold for the future of the global financial system. In this timely and important volume, distinguished academics, officials in multilateral organizations, and public and private sector economists explore the causes of and effective policy responses to international currency crises. Topics covered include exchange rate regimes, contagion (transmission of currency crises across countries), the current account of the balance of payments, the role of private sector investors and of speculators, the reaction of the official sector (including the multilaterals), capital controls, bank supervision and weaknesses, and the roles of cronyism, corruption, and large players (including hedge funds). Ably balancing detailed case studies, cross-country comparisons, and theoretical concerns, this book will make a major contribution to ongoing efforts to understand and prevent international currency crises.

Author : Peter B. Dixon,Dale Jorgenson
Publisher : Newnes
Page : 1143 pages
File Size : 55,8 Mb
Release : 2013-11-14
Category : Business & Economics
ISBN : 9780444536358

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Handbook of Computable General Equilibrium Modeling by Peter B. Dixon,Dale Jorgenson Pdf

In this collection of 17 articles, top scholars synthesize and analyze scholarship on this widely used tool of policy analysis, setting forth its accomplishments, difficulties, and means of implementation. Though CGE modeling does not play a prominent role in top US graduate schools, it is employed universally in the development of economic policy. This collection is particularly important because it presents a history of modeling applications and examines competing points of view. Presents coherent summaries of CGE theories that inform major model types Covers the construction of CGE databases, model solving, and computer-assisted interpretation of results Shows how CGE modeling has made a contribution to economic policy

Author : Jon Bakija,Lane Kenworthy,Peter Lindert,Jeff Madrick
Publisher : Univ of California Press
Page : 224 pages
File Size : 47,8 Mb
Release : 2016-06-21
Category : Political Science
ISBN : 9780520962811

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How Big Should Our Government Be? by Jon Bakija,Lane Kenworthy,Peter Lindert,Jeff Madrick Pdf

The size of government is arguably the most controversial discussion in United States politics, and this issue won't fade from prominence any time soon. There must surely be a tipping point beyond which more government taxing and spending harms the economy, but where is that point? In this accessible book, best-selling authors Jeff Madrick, Jon Bakija, Lane Kenworthy, and Peter Lindert try to answer whether our government can grow any larger and examine how we can optimize growth and fair distribution.

Author : Willi Leibfritz,John Thornton,Alexandra Bibbee
Publisher : OECD
Page : 144 pages
File Size : 54,8 Mb
Release : 1997
Category : Fiscal policy
ISBN : UCSC:32106014518879

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Taxation and Economic Performance by Willi Leibfritz,John Thornton,Alexandra Bibbee Pdf

This paper reviews the theoretical and empirical literature on the effects of taxation on economic performance, adds marginally to the empirical literature, and draws conclusions for tax policy in OECD countries.

Author : Alan J. Auerbach
Publisher : Unknown
Page : 196 pages
File Size : 49,8 Mb
Release : 1988
Category : Electronic
ISBN : OCLC:1023887421

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Dynamic Fiscal Policy by Alan J. Auerbach Pdf