'The Short- and Long-Run Tax Revenue Response to Changes in Tax Bases'

Economics Bulletin, Vol. 29, No. 3, 2009

Posted: 10 Jul 2012

Date Written: August 10, 2009

Abstract

This paper examines the short- and long-run behavior of tax receipts with regard to their tax bases. In addition, the possibility of asymmetries in tax responses is explicitly included. The methodology is applied to the three main tax categories in the Netherlands for the period 1971-2005, after removing effects from discretionary measures. The outcomes indicate that short-term elasticities can deviate markedly from long-term ones. Furthermore, short-term elasticities tend to be smaller in less favorable circumstances. Ignoring such differences between various elasticity measures may contribute to adverse revenue surprises.

Keywords: tax elasticity

JEL Classification: H20

Suggested Citation

Wolswijk, Guido, 'The Short- and Long-Run Tax Revenue Response to Changes in Tax Bases' (August 10, 2009). Economics Bulletin, Vol. 29, No. 3, 2009, Available at SSRN: https://ssrn.com/abstract=2103010

Guido Wolswijk (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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