Household Debt and the Dynamic Effects of Income Tax Changes

• Autores: James S. Cloyne, Paolo Surico
• Localización: Review of economic studies, ISSN 0034-6527, Vol. 84, Nº 1, 2017, págs. 45-81
• Idioma: inglés
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• Resumen

  • Using a new narrative measure of fiscal policy shocks for the U.K., we show that households with mortgage debt exhibit large and significant consumption responses to tax changes. Homeowners without a mortgage, in contrast, do not adjust their expenditure, with responses not statistically different from zero at all horizons. We compare our findings to the predictions of traditional and newer theories of liquidity constraints, providing a novel interpretation for the aggregate effects of tax changes on the macroeconomy.