IDEAS home Printed from https://ideas.repec.org/p/een/camaaa/2024-63.html
   My bibliography  Save this paper

Discretionary Tax Changes and the Macroeconomic Activity: New Narrative Evidence from Australia

Author

Listed:
  • Changchen Ge

Abstract

This paper examines the impact of discretionary tax changes on economic activity in Australia. I use written records such as the Budget Report and Election Speeches to identify the revenue effect, timing and motivation of all major Commonwealth tax policy actions from 1983Q4 to 2018Q4. This approach allows me to isolate legislated tax changes that are not taken for reasons related to prospective economic conditions. I then examine the effects on output by treating the unanticipated exogenous tax changes as an instrument for tax revenue. The resulting estimates indicate that tax cuts are expansionary but much less persistent. The large effects stems in considerable part from a strong positive effect of tax cuts on consumption.

Suggested Citation

  • Changchen Ge, 2024. "Discretionary Tax Changes and the Macroeconomic Activity: New Narrative Evidence from Australia," CAMA Working Papers 2024-63, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2024-63
    as

    Download full text from publisher

    File URL: https://cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2024-10/63_2024_ge.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    narrative approach; tax multiplier; Australia;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • N17 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Africa; Oceania

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:een:camaaa:2024-63. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Cama Admin (email available below). General contact details of provider: https://edirc.repec.org/data/asanuau.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.