The macroeconomic effects of legislated tax changes in Germany

Hayo, Bernd; Uhl, Matthias

doi:10.1093/oep/gpt017

Cited by 60 publications

(89 citation statements)

References 11 publications

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“…Using a back-of-theenvelope calculation to transform our qualitative estimate into a quantitative one, we find a marginal propensity to consume of around 0.53, which implies a traditional Keynesian multiplier for tax changes of -1.1. This microeconomic-based finding is compatible with recent macroeconomic evidence from Hayo and Uhl (2013). Using narratively identified German tax shocks to study the consequences of tax changes for GDP and consumption in a vector-autoregressive model, they find that a unit increase in taxes reduces consumption by 1.8.…”

Section: Introductionsupporting

confidence: 75%

“…However, note that the error bands for consumption responses estimated using aggregate time series are typically large, so that it is not clear whether the difference is statistically significant. For instance, testing our survey-based estimate of the effect of a tax change in Germany against the estimate reported in Hayo and Uhl (2013) does not yield a significant difference.…”

Section: Consumption Responses To Tax Changes In Our Survey and In Thmentioning

confidence: 82%

“…By analysing self-reported consumption responses to a recent payroll tax change using a representative survey of the German population, we circumvent these identifying assumptions. Thus, this study can be seen as a useful and novel contribution to the macroeconomic literature on how tax changes affect economic activity in Germany (Perotti, 2004;Baum and Koester, 2011;Hayo and Uhl, 2013). …”

Section: Introductionmentioning

confidence: 91%

“…However, we view this as a lower bound for tax multiplier estimate because it omits labour market and investment responses to the tax change. Investment is usually found to be more sensitive to tax changes than is consumption (Romer and Romer, 2010;Mertens and Ravn, 2012;Cloyne, 2013;Hayo and Uhl, 2013). Hence, the point here is to allow for a comparison between our qualitative and available quantitative estimates, not to provide a realistic description of how the overall economy reacts to tax changes.…”

Section: Consumption Responses To Tax Changes In Our Survey and In Thmentioning

confidence: 99%

“…Cloyne studies the impact of narrative tax shocks in a vectorautoregressive model (VAR) for the United Kingdom and finds an impact effect for consumption of -1.3 per cent and a peak impact of -2.9 per cent following a tax shock of size 1 per cent of GDP. Hayo and Uhl (2013) use narratively identified tax shocks in Germany to study the consequences of tax changes for GDP and consumption in a VAR and find peak effects of a unit increase in the tax-to-GDP ratio of -2.4% on GDP and -1.8% on consumption. Using a structural VAR instead of tax shocks, Blanchard and Perotti (2002) find a much smaller impact on consumption: private consumption falls by a maximum of 0.35 per cent after a unit tax increase.…”

Section: Consumption Responses To Tax Changes In Our Survey and In Thmentioning

confidence: 99%

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Taxation and Consumption: Evidence from a Representative Survey of the German Population

Hayo

Uhl

2014

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Taxation and Consumption:Evidence from a Representative Survey of the German PopulationAbstract Using a representative survey of the German population, this paper studies individual consumption responses to a recent payroll tax reduction. Our results show that 55% of the respondents spend the extra money, indicating considerable potential for tax changes to affect consumption and economic activity. Our analysis of the socio-demographic and economic determinants of consumption responses suggests that temporary and permanent tax changes have a similar impact, that interest rates are an important determinant of consumption responses to tax changes, and that households with higher income have a higher propensity to consume.

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Section: Introductionsupporting

confidence: 75%

Section: Consumption Responses To Tax Changes In Our Survey and In Thmentioning

confidence: 82%

Section: Introductionmentioning

confidence: 91%

Section: Consumption Responses To Tax Changes In Our Survey and In Thmentioning

confidence: 99%

Section: Consumption Responses To Tax Changes In Our Survey and In Thmentioning

confidence: 99%

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Taxation and Consumption: Evidence from a Representative Survey of the German Population

Hayo

Uhl

2014

SSRN Journal

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Heterogeneous responses to corporate marginal tax rates: Evidence from small and large firms

Eskandari

Zamanian

2023

J of Applied Econometrics

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SummaryDo small and large firms respond differently to tax cuts? Using new narrative measures of the exogenous variation in corporate marginal tax rates and a unique dataset of US manufacturing firms, we find that the investment of large firms is more sensitive to a marginal tax cut than that of small firms. Furthermore, we show that small firms finance their new investments almost entirely through debt, whereas large firms use both cash and debt. Following a tax cut, the tax advantage of debt financing falls relative to cash financing. This substitution effect is more pronounced for large firms and induces them to rely on cash financing to a larger extent than small firms.

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Estimating policy-corrected long-term and short-term tax elasticities for the USA, Germany, and the United Kingdom

2022

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We estimate the elasticities of the most important tax categories using a new quarterly database of discretionary tax measures for the USA, Germany, and the United Kingdom over the period 1980Q1 to 2018Q2. Employing Romer and Romer’s (2009) narrative approach, we construct a policy-neutral dataset based on revenue figures from governmental records. Using this quantitative information, we are able to subtract policy-induced changes, which often are not considered in the literature. Furthermore, we estimate state-dependent elasticities. Our conclusions are as follows. (i) In Germany and the UK, long-term tax-to-base elasticities are generally higher than short-term elasticities, whereas results for the USA are mixed. (ii) Short-term base-to-output elasticities tend to be smaller than unity, whereas long-term elasticities are close to unity. (iii) German and UK tax-to-output elasticities in the short term are lower than long-term elasticities, with mixed results for the USA. (iv) For tax-to-base elasticities, we find business-cycle asymmetries across countries but not within countries. (v) For base-to-output elasticities, our results suggest few asymmetries across countries and more asymmetries across tax types. (vi) Typically, the above conclusions do not hold for corporate income tax.

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The macroeconomic effects of legislated tax changes in Germany

Cited by 60 publications

References 11 publications

Taxation and Consumption: Evidence from a Representative Survey of the German Population

Taxation and Consumption: Evidence from a Representative Survey of the German Population

Heterogeneous responses to corporate marginal tax rates: Evidence from small and large firms

Estimating policy-corrected long-term and short-term tax elasticities for the USA, Germany, and the United Kingdom

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