Author(s): Belo, Daniel Filipe Tiago
Date: 2014
Persistent ID: http://hdl.handle.net/10362/11524
Origin: Repositório Institucional da UNL
Subject(s): business cycle; Tax policy; Tax rate; Cyclicality
Author(s): Belo, Daniel Filipe Tiago
Date: 2014
Persistent ID: http://hdl.handle.net/10362/11524
Origin: Repositório Institucional da UNL
Subject(s): business cycle; Tax policy; Tax rate; Cyclicality
A Work Project, presented as part of the requirements for the Award of a Masters Degree in Economics from the NOVA – School of Business and Economics
We contribute to the literature addressing the cyclical behavior of tax policy. Most recent studies have relied on tax revenues and adjusted measures of tax collections to analyze this issue. We argue that such methodology is insufficient to characterize tax policy cyclicality, as tax revenues move endogenously with the business cycle. Consequently, this topic is revisited by making use of the policy instrument, tax rate, as opposed to the policy outcome, tax revenues. Using data for 13 European countries, we find that tax policy has mostly been a-cyclical over the last 30 years.