The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States: Comment
By Carsten Jentsch, Kurt G. Lunsford. The American Economic Review, 2019
182 citations recorded by the source corpus.
Mertens and Ravn (2013) estimate impulse response functions (IRFs) from income tax changes in a structural vector autoregression (SVAR) by using narrative accounts of tax liability changes as proxy variables. To produce confidence intervals for their IRFs, they use a residual-based wild bootstrap, which has subsequently become popular in the proxy SVAR literature. We argue that their wild bootstrap is not valid, producing confidence intervals that are much too small. Using a residual-based moving block bootstrap that is proven to be asymptotically valid, we reestimate confidence intervals for Mertens and Ravn’s (2013) IRFs and find no statistically significant effects of tax changes on output, labor, and investment. (JEL E23, E62, H24, H25, H31, H32)
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/f032f1d3c0f5c58d089569f46ce7fca719339d1f
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Economics and Econometrics
- Francesco Giavazzi
- Matteo Paradisi
- A. Alesina
- Jiří Slačálek
- Carlo A. Favero
- Omar Barbiero
- M. Lenza
- Elvire Guillaud
Citations in the corpus
- How Does Monetary Policy Affect Income and Wealth Inequality? Evidence from Quantitative Easing in the Euro Area (2018, methodology): “To estimate the effects of quantitative easing, we identify a QE shock by means of an external instrument approach (Stock, 2008; Stock and Watson, 2012; Mertens and Ravn, 2013; Ramey, 2016; Miranda-Agrippino and Ricco, 2019; Montiel Olea et al., 2021; Jentsch and Lunsford, 2019).”
- The Effects of Fiscal Consolidations: Theory and Evidence (2017, background): “The latter, together with Mertens and Ravn (2013), focus on the effect of different kinds of tax measures implemented in the US after World War II.”
- The Macroeconomic Effects of Oil Supply News: Evidence from OPEC Announcements (2021, unknown): “To analyze how restrictive the dynamic VAR structure is, I alternatively compute the impulse responses to the identified oil supply news shock using local projections à la Jordà (2005).”