Taxes and Growth: New Narrative Evidence from Interwar Britain

• 成果类型: Article
• 署名作者: Cloyne, James; Dimsdale, Nicholas; Postel-Vinay, Natacha
• 署名单位: University of California System; University of California Davis; National Bureau of Economic Research; Center for Economic & Policy Research (CEPR); University of Oxford; University of London; London School Economics & Political Science; Centre for Economic Policy Research - UK; Centre for Economic Policy Research - UK
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdad081
• 发表日期: 2023
• 页码: 2168-2200
• 关键词: fiscal-policy; british monetary; income; rearmament; inference; CRISIS; debt

摘要

The impact of fiscal policy on economic activity is still a matter of great debate. And, ever since Keynes first commented on it, interwar Britain, 1918-39, has remained a particularly interesting and contentious case-not least because of its high-debt environment and turbulent business cycle. This debate has often focused on the effects of government spending, but little is known about the effects of tax changes. In fact, a number of tax reforms in the period focused on long-term and social objectives, often reflecting the personality of British Chancellors. Based on extensive historiographical research, we apply a narrative approach to the interwar period in Britain and isolate a new series of exogenous tax changes. We find that tax changes have a sizable effect on GDP, with multipliers exceeding 2 within two years. Our estimates provide new evidence on the effects of tax changes, contribute to the historical debate about fiscal policy in the interwar period and are also consistent with the sizable tax multipliers found after World War II.