Consumption tax cuts vs stimulus payments

• 成果类型: Article
• 署名作者: Bartal, Mehdi; Becard, Yvan
• 署名单位: Mohammed VI Polytechnic University
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2024.105227
• 发表日期: 2024
• 关键词: Fiscal stabilization policy; consumption taxes; transfers; HANK

摘要

Recent work shows that in macroeconomic models with non-Ricardian consumer behavior, uniform transfers are equivalent to interest rate cuts. That is, policymakers can use stimulus payments to substitute for conventional monetary policy when, say, the zero lower bound on short-term rates binds. We argue that in the same class of models, temporarily reducing consumption taxes delivers more stimulus than transfers - at the same cost to the taxpayer. Consumption tax cuts activate both income and substitution channels and prompt a strong response from all consumers across the wealth distribution. Simulating these policies in a quantitative heterogeneous agent New Keynesian model, we find output expands twice as much.