Household Debt and the Dynamic Effects of Income Tax Changes
112 citations recorded by the source corpus.
Using a new narrative measure of fiscal policy shocks for the U.K., we show that households with mortgage debt exhibit large and significant consumption responses to tax changes. Homeowners without a mortgage, in contrast, do not adjust their expenditure, with responses not statistically different from zero at all horizons. We compare our findings to the predictions of traditional and newer theories of liquidity constraints, providing a novel interpretation for the aggregate effects of tax changes on the macroeconomy.
Subfields: Accounting, Economics and Econometrics, Finance
View Paper: https://www.semanticscholar.org/paper/11bd04057e7ea530a59990628138eb78704fa12f
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Citations in the corpus
- The Impact of Monetary Policy on Inequality in the UK. An Empirical Analysis (2017, methodology): “Following Cloyne and Surico (2017), we assign households to di⁄erent quarters within a year based on the date of survey interview.”
- Monetary Policy According to HANK (2018, unknown): “, 2013) and (ii) a vast heterogeneity in consumption responses across the population which is largely driven by the level and composition of wealth (Misra and Surico, 2014; Cloyne and Surico, 2014).”
- Monetary Policy when Households have Debt: New Evidence on the Transmission Mechanism (2019, unknown): “This includes the earlier work by Kiyotaki and Moore (1997) and Iacoviello (2005) as well the more recent studies by Mian et al.”