Template-Type: ReDIF-Paper 1.0
Author-Name: Knut L. Seip
Author-Name-First: Knut L.
Author-Name-Last: Seip
Author-Workplace-Name: Oslo Metropolitan University
Title: Does tax reduction have an effect on gross domestic product? An empirical investigation.
Abstract: Tax reduction shocks in US economy: 1964, 1979-81 and 2002 increased gross domestic product, GDP, in the short run (≈ 3 years) so that 1% reduction increased the detrended GDP with 0.48 – 0.77 %. Following tax reductions, tax series became a leading variable to GDP for 9 to 15 years completing 1 to 2 cycles. However, in the long run, ≈ 10 years, 1 % tax reduction decreased the detrended GDP with about 0.25 %. However, tax, as Government recipts, and GDP are both composite measures so it is not unlikely that the effects may be attributable to specific components of the tax or GDP. I used a novel technique that identifies running leading relationships between time series, extracts common cycle lengths from the series and estimates lag times.
Classification-JEL: C15, E02, E62, H21
Creation-Date: 2017
File-URL: http://hdl.handle.net/20.500.12199/1333
File-Format: text/html
Keywords: Tax rate, Gross domestic product, GDP, monetary supply M2, Federal funds rate
Handle: RePEc:oml:wpaper:201701