Are Tax Cuts Contractionary at the Zero Lower Bound? Evidence from a Century of Data

• 成果类型: Article
• 署名作者: Cloyne, James; Dimsdale, Nicholas; Huertgen, Patrick
• 署名单位: University of California System; University of California Davis; National Bureau of Economic Research; University of Oxford; Deutsche Bundesbank
• 刊物名称: JOURNAL OF POLITICAL ECONOMY
• ISSN/ISSBN: 0022-3808
• DOI: 10.1086/732890
• 发表日期: 2025
• 页码: 568-603
• 关键词: fiscal-policy; income; shocks; ZLB; expansionary; inference; debt

摘要

Popular New Keynesian macroeconomic models predict that cuts in various types of distortionary taxes are contractionary when monetary policy is constrained at the zero lower bound (ZLB). We turn to a long span of history in the United Kingdom to test this hypothesis. Using a new long-run dataset of narrative-identified tax changes from 1918 to 2020, we show that tax cuts are expansionary in both low-interest-rate environments and more normal times. We do not find evidence of a deflationary spiral at the ZLB. Tax cuts may therefore still be a useful tool to stimulate economic activity when monetary policy is constrained.