TY  - JOUR
AU  - Mertens,Karel
AU  - Ravn,Morten
TI  - Empirical Evidence on the Aggregate Effects of Anticipated and Unanticipated U.S. Tax Policy Shocks
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 16289
PY  - 2010
Y2  - August 2010
UR  - http://www.nber.org/papers/w16289
L1  - http://www.nber.org/papers/w16289.pdf
N1  - Author contact info:
Karel Mertens
Department of Economics
Cornell University
404 Uris Hall
Ithaca, NY 14853
Tel: 607/255-6287
Fax: 607/255-2818
E-Mail: km426@cornell.edu

Morten Ravn
Department of Economics
University College London
London WC1E 6BT
UK
E-Mail: m.ravn@ucl.ac.uk
M3  - presented at "TAPES Conference", June 14-16, 2010
AB  - We provide empirical evidence on the dynamics effects of tax liability changes in the United States. We distinguish between surprise and anticipated tax changes using a timing-convention. We document that pre-announced but not yet implemented tax cuts give rise to contractions in output, investment and hours worked while real wages increase. In contrast, there are no significant anticipation effects on aggregate consumption. Implemented tax cuts, regardless of their timing, have expansionary and persistent effects on output, consumption, investment, hours worked and real wages. Results are shown to be very robust. We argue that tax shocks are empirically important impulses to the U.S. business cycle and that anticipation effects have been important during several business cycle episodes.
ER  -