Congressional Budget Office
Institutional Affiliation: Congressional Budget Office
NBER Working Papers and Publications
|September 2017||What Goes Up May Not Come Down: Asymmetric Incidence of Value-Added Taxes|
with , , : w23849
This paper shows that prices respond more to increases than to decreases in Value-Added Taxes (VATs). First, using two plausibly exogenous VAT changes, we show that prices respond twice as much to VAT increases than to VAT decreases. Second, we show that this asymmetry results in higher equilibrium profits and markups. Third, we find that firms operating with low profit margins are more likely to respond asymmetrically to the VAT changes than firms operating with high profit margins. Fourth, this asymmetry persists several years after the VAT changes take place. Fifth, using all VAT changes in the European Union from 1996 to 2015, we find similar levels of asymmetry.
|Who Really Benefits from Consumption Tax Cuts? Evidence from a Large VAT Reform in France.|
with : w23848
In this paper we evaluate the incidence of a large cut in value-added taxes (VAT) for French sit-down restaurants. In contrast to previous studies that focus on prices only, we estimate its effect on four groups: workers, firm owners, consumers and suppliers of material goods. Using a difference-in-differences strategy on firm-level data we find that: (1) the effect on consumers was limited, (2) employees and sellers of material goods shared 25 and 16 percent of the total benefit, and (3) the reform mostly benefited owners of sit-down restaurants, who pocketed 41 percent of the tax cut.
Published: Youssef Benzarti & Dorian Carloni, 2019. "Who Really Benefits from Consumption Tax Cuts? Evidence from a Large VAT Reform in France," American Economic Journal: Economic Policy, vol 11(1), pages 38-63. citation courtesy of
|February 2012||The Electoral Consequences of Large Fiscal Adjustments|
in Fiscal Policy after the Financial Crisis, Alberto Alesina and Francesco Giavazzi, editors
This chapter considers the evidence supporting the conventional wisdom that deficit-reducing policies lead to electoral losses for fiscally conservative governments. It focuses on large fiscal adjustments, which are currently the center of attention in many Organization for Economic Cooperation and Development (OECD) countries, and shows that there is no evidence that governments which reduce budget deficits even decisively are systematically voted out of office. In some cases they are, in some (more often) they are not.
|December 2011||The Electoral Consequences of Large Fiscal Adjustments|
with , : w17655
The conventional wisdom regarding the political consequences of large reductions of budget deficits is that they are very costly for the governments which implement them: they are punished by voters at the following elections. In the present paper, instead, we find no evidence that governments which quickly reduce budget deficits are systematically voted out of office in a sample of 19 OECD countries from 1975 to 2008. We also take into consideration issues of reverse causality, namely the possibility that only "strong and popular" governments can implement fiscal adjustments and thus they are not voted out of office "despite" having reduced the deficits. In the end we conclude that many governments can reduce deficits avoiding an electoral defeat.