How is Tax Policy Conducted over the Business Cycle?
By C. Végh, G. Vúletin. 2015
216 citations recorded by the source corpus.
It is well known by now that government spending has typically been procyclical in developing economies but acyclical or countercyclical in industrial countries. Little, if any, is known, however, about the cyclical behavior of tax rates (as opposed to tax revenues, which are endogenous to the business cycle and hence cannot shed light on the cyclicality of tax policy). We build a novel dataset on tax rates for 62 countries for the period 1960-2013 that comprises corporate income, personal income, and value-added tax rates. We find that, by and large, tax policy is acyclical in industrial countries but mostly procyclical in developing countries. Further, tax policy in countries with better institutions and/or more integrated with world capital markets tends to be less procyclical/more countercyclical.
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/b3d5032cf1ddc9977f762fdd3328cbd1d2037487
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In Economics and Econometrics
Citations in the corpus
- Fiscal Rules and the Sovereign Default Premium (2022, result): “…greater reduction of the default probability at the expense of a higher consumption volatility.6 5This is consistent with evidence for emerging economies, as documented by Gavin and Perotti (1997), Ilzetzki and Vegh (2008), Kaminsky et al. (2004), Talvi and Vegh (2009), and Vegh and Vuletin (2011).”