IDEAS home Printed from https://ideas.repec.org/a/aea/aecrev/v76y1986i4p659-75.html
   My bibliography  Save this article

A Tax-Based Test for Nominal Rigidities

Author

Listed:
  • Poterba, James M
  • Rotemberg, Julio J
  • Summers, Lawrence H

Abstract

In classical macroeconomic models with flexible wages and prices, whether a tax is levied on producers or consumers does not affect itsultimate incidence. If wages or prices are rigid in the short run, however, then shifting a tax from one side of the market to the othermay have real effects. Tax changes, therefore, provide potential testsfor the presence of nominal rigidities. This paper examines the priceand output effects of revenue-neutral shifts between direct and indirect taxation. The results provide evidence against the view thatwages and prices are completely flexible in the short run. Copyright 1986 by American Economic Association.

Suggested Citation

  • Poterba, James M & Rotemberg, Julio J & Summers, Lawrence H, 1986. "A Tax-Based Test for Nominal Rigidities," American Economic Review, American Economic Association, vol. 76(4), pages 659-675, September.
    • Handle: RePEc:aea:aecrev:v:76:y:1986:i:4:p:659-75
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0002-8282%28198609%2976%3A4%3C659%3AATTFNR%3E2.0.CO%3B2-Z&origin=repec
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Rotemberg, Julio J., 1983. "Monetary policy and costs of price adjustment," Journal of Economic Dynamics and Control, Elsevier, vol. 5(1), pages 267-288, February.
    2. Solow, Robert M, 1980. "On Theories of Unemployment," American Economic Review, American Economic Association, vol. 70(1), pages 1-11, March.
    3. J. D. Sargan, 1980. "The Consumer Price Equation in the Post War British Economy: An Exercise in Equation Specification Testing," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(1), pages 113-135.
    4. Rotemberg, Julio J, 1984. "A Monetary Equilibrium Model with Transactions Costs," Journal of Political Economy, University of Chicago Press, vol. 92(1), pages 40-58, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Filippo Occhino, 2001. "Monetary Policy Shocks in an Economy with Segmented Markets," Departmental Working Papers 200108, Rutgers University, Department of Economics.
    2. Menzio, Guido & Shi, Shouyong & Sun, Hongfei, 2013. "A monetary theory with non-degenerate distributions," Journal of Economic Theory, Elsevier, vol. 148(6), pages 2266-2312.
    3. Eduard Marinov, 2017. "The 2017 Nobel Prize in Economics," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 6, pages 117-159.
    4. Rotemberg, Julio J & Driscoll, John C & Poterba, James M, 1995. "Money, Output, and Prices: Evidence from a New Monetary Aggregate," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(1), pages 67-83, January.
    5. Yannick L'Horty & Florence Thibault, 1997. "Le Nairu en France : les insuffisances d'une courbe de Phillips," Économie et Prévision, Programme National Persée, vol. 127(1), pages 83-99.
    6. Committee, Nobel Prize, 2017. "Richard H. Thaler: Integrating Economics with Psychology," Nobel Prize in Economics documents 2017-1, Nobel Prize Committee.
    7. Xavier Ragot, 2018. "Limited Participation, Capital Accumulation and Optimal Monetary Policy," Working Papers hal-03444395, HAL.
    8. John Haltiwanger & Mark Plant, 1984. "How Should We Measure Slackness in the Labor Market?," UCLA Economics Working Papers 343, UCLA Department of Economics.
    9. Chiu, Jonathan, 2014. "Endogenously Segmented Asset Market In An Inventory-Theoretic Model Of Money Demand," Macroeconomic Dynamics, Cambridge University Press, vol. 18(2), pages 438-472, March.
    10. Xavier Ragot & Florin O. Bilbiie, 2016. "Monetary Policy, Inflation, and Inequality: The Case for Helicopters," 2016 Meeting Papers 1663, Society for Economic Dynamics.
    11. Lawrence J. Christiano & Martin S. Eichenbaum, 1992. "Liquidity effects, the monetary transmission mechanism, and monetary policy," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 16(Nov), pages 2-14.
    12. Fernando Alvarez & Andrew Atkeson & Patrick J. Kehoe, 2002. "Money, Interest Rates, and Exchange Rates with Endogenously Segmented Markets," Journal of Political Economy, University of Chicago Press, vol. 110(1), pages 73-112, February.
    13. Palm, F.C., 1981. "Structural econometric modelling and time series analysis towards an integrated approach," Serie Research Memoranda 0004, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    14. Sabrina T Howell & J David Brown, 2023. "Do Cash Windfalls Affect Wages? Evidence from R&D Grants to Small Firms," The Review of Financial Studies, Society for Financial Studies, vol. 36(5), pages 1889-1929.
    15. Semyon Malamud & Andreas Schrimpf, 2016. "Intermediation Markups and Monetary Policy Passthrough," Swiss Finance Institute Research Paper Series 16-75, Swiss Finance Institute.
    16. Lucas, Deborah, 1999. "Price and interest rate dynamics induced by multiperiod contracts," The North American Journal of Economics and Finance, Elsevier, vol. 10(2), pages 315-338.
    17. Pavel Ryska & Jan Prùša, 2011. "Efficiency Wages in Heterogenous Labour Markets," Working Papers IES 2011/28, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Aug 2011.
    18. D. Simochkin I. & Д. Симочкин И., 2018. "Объединяя экономику и психологию: теоретические и практические аспекты (Нобелевская премия по экономике 2017) // Bringing Together Economics and Psychology: Theoretical and Practical Aspects (Nobel Pr," Мир новой экономики // The world of new economy, Финансовый университет при Правительстве Российской Федерации // Financial University under The Governtment оf The Russian Federation, vol. 12(2), pages 98-109.
    19. Peng, Yulei & Zervou, Anastasia, 2022. "Monetary policy rules and the equity premium in a segmented markets model," Journal of Macroeconomics, Elsevier, vol. 73(C).
    20. Aiyagari, S. Rao & Braun, R. Anton, 1998. "Some models to guide monetary policymakers," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 48(1), pages 1-42, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aecrev:v:76:y:1986:i:4:p:659-75. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.