A Survey on the Output Effects of Tax Reforms from a Policy Perspective

28 Pages Posted: 22 Nov 2016

See all articles by Richard Kneller

Richard Kneller

University of Nottingham

Florian Misch

ZEW – Leibniz Centre for European Economic Research

Date Written: January 2017

Abstract

This study reviews the existing evidence on the effects of tax reforms on output levels and growth over the short and long run from different strands of the literature. It develops and applies criteria to evaluate the usefulness of ex‐post estimates to predict the effects of tax reforms ex ante. Based on these criteria, we present detailed tables summarizing and comparing ex‐post estimates of the effects of tax reforms. Overall, our review suggests that at least the direction of the short‐run and long‐run growth effects can be predicted with a reasonable degree of certainty, but there is disagreement with respect to the magnitude. Our review also suggests that depending on the tax change, trade‐offs between short‐run stabilization and long‐run growth may arise and that more research on this question is needed.

JEL Classification: E62, H20, O20

Suggested Citation

Kneller, Richard and Misch, Florian, A Survey on the Output Effects of Tax Reforms from a Policy Perspective (January 2017). Contemporary Economic Policy, Vol. 35, Issue 1, pp. 165-192, 2017. Available at SSRN: https://ssrn.com/abstract=2873957 or http://dx.doi.org/10.1111/coep.12172

Richard Kneller (Contact Author)

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

Florian Misch

ZEW – Leibniz Centre for European Economic Research ( email )

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

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