TY  - JOUR
AU  - Auerbach,Alan J.
AU  - Feenberg,Daniel
TI  - The Significance of Federal Taxes as Automatic Stabilizers
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7662
PY  - 2000
Y2  - April 2000
UR  - http://www.nber.org/papers/w7662
L1  - http://www.nber.org/papers/w7662.pdf
N1  - Author contact info:
Alan J. Auerbach
Department of Economics
508-1 Evans Hall, #3880
University of California, Berkeley
Berkeley, CA 94720-3880
Tel: 510/643-0711
Fax: 510/643-0413
E-Mail: auerbach@econ.berkeley.edu

Daniel R. Feenberg
National Bureau of Economic Research
1050 Massachusetts Avenue
Cambridge, MA 02138
Tel: 617/588-0343
Fax: 617/868-2742
E-Mail: feenberg@nber.org
AB  - Using the TAXSIM model for the period 1962-95, we consider the federal tax system's impact as an automatic stabilizer.  Despite the many changes in the tax system, there has been relatively little change in its role as an automatic stabilizer.  We estimate that individual federal taxes offset perhaps as much as 8 percent of initial shocks to GDP.  We also suggest that the progressive income tax may help to stabilize output via its effect on the supply of labor, an additional effect that may even be of similar magnitude to the more traditional path of stabilization through aggregate demand.
ER  -