Short-Term Tax Cuts, Long-Term Stimulus /
Cloyne, James.
Short-Term Tax Cuts, Long-Term Stimulus / James Cloyne, Joseba Martinez, Haroon Mumtaz, Paolo Surico. - Cambridge, Mass. National Bureau of Economic Research 2022. - 1 online resource: illustrations (black and white); - NBER working paper series no. w30246 . - Working Paper Series (National Bureau of Economic Research) no. w30246. .
July 2022.
We study the persistent effects of temporary changes in U.S. federal corporate and personal income tax rates using a narrative identification approach. A corporate income tax cut leads to a sustained increase in GDP and productivity, with peak effects between five and eight years. R&D spending and capital investment display hump-shaped responses while hours worked and employment are much less affected. In contrast, personal income tax cuts trigger a short-lived boost to GDP, productivity and hours worked but have no long-term effects. We develop and estimate an endogenous growth model with variable factor utilization and show that these features generate a pro-cyclical response of productivity which is key to account for our empirical findings.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.
Production
Fiscal Policy • Modern Monetary Theory
Personal Income and Other Nonbusiness Taxes and Subsidies
Business Taxes and Subsidies
Household
Firm
Management of Technological Innovation and R&D
Short-Term Tax Cuts, Long-Term Stimulus / James Cloyne, Joseba Martinez, Haroon Mumtaz, Paolo Surico. - Cambridge, Mass. National Bureau of Economic Research 2022. - 1 online resource: illustrations (black and white); - NBER working paper series no. w30246 . - Working Paper Series (National Bureau of Economic Research) no. w30246. .
July 2022.
We study the persistent effects of temporary changes in U.S. federal corporate and personal income tax rates using a narrative identification approach. A corporate income tax cut leads to a sustained increase in GDP and productivity, with peak effects between five and eight years. R&D spending and capital investment display hump-shaped responses while hours worked and employment are much less affected. In contrast, personal income tax cuts trigger a short-lived boost to GDP, productivity and hours worked but have no long-term effects. We develop and estimate an endogenous growth model with variable factor utilization and show that these features generate a pro-cyclical response of productivity which is key to account for our empirical findings.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.
Production
Fiscal Policy • Modern Monetary Theory
Personal Income and Other Nonbusiness Taxes and Subsidies
Business Taxes and Subsidies
Household
Firm
Management of Technological Innovation and R&D