Do Output Contractions Cause Investment in Fiscal Capacity?

• 成果类型: Article
• 署名作者: Gillitzer, Christian
• 署名单位: Reserve Bank of Australia
• 刊物名称: AMERICAN ECONOMIC JOURNAL-ECONOMIC POLICY
• ISSN/ISSBN: 1945-7731
• DOI: 10.1257/pol.20150161
• 发表日期: 2017
• 页码: 189-227
• 关键词: new-deal; structural reforms; state capacity; taxation; FEDERALISM; likelihood; GROWTH; POLICY; income; COSTS

摘要

This paper shows that an economic slump can induce a government to invest in fiscal capacity. Large negative income shocks stress the revenue-raising capability of narrow tax bases, making an increase in tax base breadth desirable relative to its fixed implementation cost. A broader tax base enables revenue to be raised at lower tax rates, and so lower deadweight loss. The behavior of US state governments during the Great Depression supports the model: states experiencing larger than average negative income shocks were more likely to adopt a retail sales tax than were states experiencing smaller than average income shocks.