The Effects of Countercyclical Fiscal Policy: Firm-Level Evidence from Temporary Consumption Tax Cuts in Turkey

40 Pages Posted: 22 Dec 2012

See all articles by Florian Misch

Florian Misch

ZEW – Leibniz Centre for European Economic Research

Atilim Seymen

ZEW – Leibniz Centre for European Economic Research

Date Written: 2012

Abstract

The paper investigates the effects of temporary consumption tax cuts using firm‐level data. As part of its countercyclical measures implemented during the recent global economic crisis, Turkey temporarily lowered consumption taxes on selected durables. Using data on the change of sales of firms that benefited from this measure and of those that did not over different periods, we perform a difference‐in‐difference analysis where we also control for various unobservable effects including sector‐specific shocks to address potential endogeneity. We find positive and robust effects of consumption tax cuts on the change of firm sales which is consistent with theoretical predictions.

Keywords: Countercyclical fiscal policy, consumption tax cuts, firm‐level data

JEL Classification: E32, E62, H20

Suggested Citation

Misch, Florian and Seymen, Atilim, The Effects of Countercyclical Fiscal Policy: Firm-Level Evidence from Temporary Consumption Tax Cuts in Turkey (2012). ZEW - Centre for European Economic Research Discussion Paper No. 12-082. Available at SSRN: https://ssrn.com/abstract=2192045 or http://dx.doi.org/10.2139/ssrn.2192045

Florian Misch (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Atilim Seymen

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
Mannheim, 68161
Germany

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