Tax Revenue Elasticities Corrected for Policy Changes in the EU

47 Pages Posted: 21 Jan 2016

See all articles by Gilles Mourre

Gilles Mourre

European Union - European Commission

Savina Princen

Catholic University of Louvain (UCL) - Faculty of Economic, Social and Political Sciences

Date Written: December 17, 2015

Abstract

This paper investigates how tax revenue elasticities develop with respect to their tax base and analyses the specific impact of the business cycle. The main novelty of the paper is to use revenue data net of discretionary tax measures. Based on an EU country panel for the period 2001-13, we estimate short-term and long-term revenue elasticities for different revenue categories. Then, we add different indicators of the business cycle to test its specific influence on the short-term dynamics of revenue-to-base elasticities. A specific impact of the business cycle is found for all revenue categories, except for consumption taxes.

Keywords: fiscal policy, budget balance, revenue elasticity, cyclical adjustment, tax measures

JEL Classification: E320, H200, H300, H600

Suggested Citation

Mourre, Gilles and Princen, Savina, Tax Revenue Elasticities Corrected for Policy Changes in the EU (December 17, 2015). CESifo Working Paper Series No. 5657, Available at SSRN: https://ssrn.com/abstract=2719463

Gilles Mourre

European Union - European Commission ( email )

Rue de la Loi 200
Brussels, B-1049
Belgium

Savina Princen (Contact Author)

Catholic University of Louvain (UCL) - Faculty of Economic, Social and Political Sciences ( email )

B-1348 Louvain-la-Neuve
Belgium

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