Can Taxes and Bonds Finance Government Spending?

The political costs of taxes and government spending

The marginal political costs of different types of taxes and government spending, as well as voter preferences over different fiscal variables, are examined using two different specifications for political cost one based on the probability of incumbent defeat and the other based on the incumbent's percentage of the vote. Models associated with these two specifications, in which voting behaviour...

How Can Government Spending Stimulate Consumption?

Recent empirical work finds that government spending shocks can cause aggregate consumption to increase. This paper builds on the framework of imperfect information in Lucas (1972) and Lorenzoni (2009) to show how government spending can stimulate consumption. Owners of firms targeted by an increase in government spending perceive an increase in their permanent income relative to their future t...

Government Spending and Growth

An empirical characterization of the dynamic effects of changes in government spending and taxes on output

This paper characterizes the dynamic effects of shocks in government spending and taxes on economic activity in the United States in the postwar period. It does so by using a structural VAR approach that relies on institutional information about the tax and transfer systems and the timing of tax collections to identify the automatic response of taxes and spending to activity, and, by implicatio...

A Review of Taxes and Corporate Finance

This paper reviews domestic and multinational corporate tax research. For each topic, the theoretical arguments explaining how taxes can affect corporate decision-making and firm value are reviewed, followed by a summary of the related empirical evidence and a discussion of unresolved issues. Tax research generally supports the hypothesis that high-tax rate firms pursue policies that provide ta...