The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States: Comment

Carsten Jentsch; Kurt G. Lunsford

doi:10.1257/aer.20162011

journal article Jul 01, 2019

The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States: Comment

Carsten Jentsch Kurt G. Lunsford

American Economic Review Vol. 109 No. 7 pp. 2655-2678 · American Economic Association

View at Publisher Save 10.1257/aer.20162011

Abstract

Mertens and Ravn (2013) estimate impulse response functions (IRFs) from income tax changes in a structural vector autoregression (SVAR) by using narrative accounts of tax liability changes as proxy variables. To produce confidence intervals for their IRFs, they use a residual-based wild bootstrap, which has subsequently become popular in the proxy SVAR literature. We argue that their wild bootstrap is not valid, producing confidence intervals that are much too small. Using a residual-based moving block bootstrap that is proven to be asymptotically valid, we reestimate confidence intervals for Mertens and Ravn’s (2013) IRFs and find no statistically significant effects of tax changes on output, labor, and investment. (JEL E23, E62, H24, H25, H31, H32)

Topics

No keywords indexed for this article. Browse by subject →

References

16

[1]

10.1162/003355302320935043

[2]

10.1016/j.jeconom.2015.10.004

[3]

Monetary Policy, Real Activity, and Credit Spreads: Evidence from Bayesian Proxy SVARs

Dario Caldara, Edward Herbst

American Economic Journal: Macroeconomics 10.1257/mac.20170294

[4]

10.1111/jmcb.12243

[5]

Fernald John Federal Reserve Bank of San Francisco Working Paper (2014)

[6]

Monetary Policy Surprises, Credit Costs, and Economic Activity

Mark Gertler, Peter Karadi

American Economic Journal: Macroeconomics 10.1257/mac.20130329

[7]

10.1016/j.jeconom.2003.10.030

[8]

Jentsch Carsten Federal Reserve Bank of Cleveland Working Paper (2016)

[9]

10.1162/003465398557465

[10]

Lunsford Kurt G Federal Reserve Bank of Cleveland Working Paper (2015)

[11]

Lunsford Kurt G Federal Reserve Bank of Cleveland Working Paper (2016)

[12]

10.1257/aer.103.4.1212

[13]

10.1016/j.jmoneco.2013.04.004

[14]

10.1111/iere.12282

[15]

10.1257/aer.100.3.763

[16]

10.1353/eca.2012.0005

Cited By

90

Heteroskedastic proxy vector autoregressions: An identification-robust test for time-varying impulse responses in the presence of multiple proxies

Martin Bruns, Helmut Lütkepohl · 2024

Journal of Economic Dynamics and Co...

The composition of public spending and the inflationary effects of fiscal policy shocks

Mathias Klein, Ludger Linnemann · 2023

European Economic Review

Delphic and odyssean monetary policy shocks: Evidence from the euro area

Philippe Andrade, Filippo Ferroni · 2021

Journal of Monetary Economics

Metrics

90

Citations

16

References

Details

Published: Jul 01, 2019
Vol/Issue: 109(7)
Pages: 2655-2678

Authors

C

Carsten Jentsch

TU Dortmund University, Faculty of Statistics, D-44221 Dortmund, Germany (email: )

K

Kurt G. Lunsford

Federal Reserve Bank of Cleveland, P.O. Box 6387, Cleveland, OH 44101 (email: )

Cite This Article

Carsten Jentsch, Kurt G. Lunsford (2019). The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States: Comment. American Economic Review, 109(7), 2655-2678. https://doi.org/10.1257/aer.20162011

The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States: Comment

You May Also Like