Excise Tax Setting in a Dynamic Space-Time Framework

31 Pages Posted: 1 Jul 2015

See all articles by Adam J. Hoffer

Adam J. Hoffer

University of Wisconsin - La Crosse

Donald J. Lacombe

West Virginia University - Regional Research Institute

Date Written: June 29, 2015

Abstract

This study develops a simple model for analyzing excise tax setting in a competitive framework. Then, this study utilizes a dynamic space-time panel econometric model to explore cigarette and beer tax rate setting from U.S. states from 1960-2007. The empirical findings support the model predictions. Both cigarette and beer taxes are highly persistent, but cigarette tax rates are more competitive (spatially correlated) across states.

Keywords: horizontal tax competition, dynamic space-time model, spatial econometrics

JEL Classification: C31, C23, H71, H73

Suggested Citation

Hoffer, Adam J. and Lacombe, Donald J., Excise Tax Setting in a Dynamic Space-Time Framework (June 29, 2015). Available at SSRN: https://ssrn.com/abstract=2624765 or http://dx.doi.org/10.2139/ssrn.2624765

Adam J. Hoffer (Contact Author)

University of Wisconsin - La Crosse ( email )

1725 State Street
La Crosse, WI 54601
United States

Donald J. Lacombe

West Virginia University - Regional Research Institute ( email )

P.O. Box 6825
Morgantown, WV 26506-6825
United States
1-304-293-8543 (Phone)
1-304-293-6699 (Fax)

HOME PAGE: http://community.wvu.edu/~djl041/

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