The output effects of tax changes: narrative evidence from Spain

• Autores: Paula Gil, Francisco Martí, Richard Morris, Roberto Ramos, Javier J. Pérez
• Localización: SERIEs : Journal of the Spanish Economic Association, ISSN 1869-4195, Vol. 10, Nº. 1, 2019, págs. 1-23
• Idioma: inglés
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• Resumen

  • This paper estimates the GDP impact of legislated tax changes in Spain using a newly constructed narrative record for the period 1986–2015. Our baseline estimates suggest that a 1% of GDP increase in exogenous taxes depresses output by around 1.3% after 1 year, this negative effect fading away at more distant horizons. We also find that the effects of changes in indirect taxes are larger and that, following a tax increase, investment reacts more than consumption. Overall, our set of estimates is consistent with negative output effects triggered by tax increases, yet the quantitative effects are subject to non-negligible uncertainty that is reflected in wide confidence bands, in line with the extant literature for other countries.