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Tax news in good and bad times

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  • Rangaraju, Sandeep Kumar
  • Herrera, Ana María

Abstract

We investigate whether the effect of tax news depends on the state of the economy. Using U.S. quarterly data, we show that news about future tax cuts are more contractionary during recessions. This nonlinearity is mainly due to the response of durable consumption and, especially, nonresidential investment.

Suggested Citation

  • Rangaraju, Sandeep Kumar & Herrera, Ana María, 2021. "Tax news in good and bad times," Economics Letters, Elsevier, vol. 207(C).
    • Handle: RePEc:eee:ecolet:v:207:y:2021:i:c:s0165176521003086
    DOI: 10.1016/j.econlet.2021.110031
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    Cited by:

    1. Tosun, Onur Kemal & Lucey, Brian, 2023. "Growth … What growth?," Finance Research Letters, Elsevier, vol. 52(C).
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    3. Karaki, Mohamad B. & Safieddine, Hadi, 2023. "Do defense news crowd out private investment?," Economics Letters, Elsevier, vol. 233(C).
    4. Hayo, Bernd & Mierzwa, Sascha, 2022. "Legislative tax announcements and GDP: Evidence from the United States, Germany, and the United Kingdom," Economics Letters, Elsevier, vol. 216(C).

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    More about this item

    Keywords

    Fiscal policy; Policy foresight; Anticipated tax shocks;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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