Replication data for: Do Output Contractions Cause Investment in Fiscal Capacity?

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AEJPol-2015-161.R1_dataset			10/13/2019 04:10:AM
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Project Citation:

Gillitzer, Christian. Replication data for: Do Output Contractions Cause Investment in Fiscal Capacity? Nashville, TN: American Economic Association [publisher], 2017. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-13. https://doi.org/10.3886/E114642V1

Project Description

Summary: 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.

Scope of Project

JEL Classification:
      E32 Business Fluctuations; Cycles
      E62 Fiscal Policy
      H25 Business Taxes and Subsidies including sales and value-added (VAT)
      H71 State and Local Taxation, Subsidies, and Revenue
      N42 Economic History: Government, War, Law, International Relations, and Regulation: U.S.; Canada: 1913-
      N92 Regional and Urban History: U.S.; Canada: 1913-

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V1 [2019-10-13]

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