Economy Workshop | Guillermo Vuletin (Inter-American Development Bank)

“Non-linear effect of tax changes on output: A worldwide narrative approach”

We are pleased to invite you to take part in the workshop that will take place at Reconquista 250, 9th floor on Thursday, August 25th, 2016, at 3.30 pm. Please confirm attendance by e-mail to: investig@bcra.gob.ar

Abstract

Following the narrative approach developed by Romer and Romer (2010) for the United States we accessed a new value-added tax database for 51 countries (21 industrial countries and 30 developing countries) during the 1970-2014 period to identify 96 tax changes which, based on contemporary economic records, are classified as endogenous and exogenous to current (or future) economic conditions. Following the traditional methodology proposed by Blanchard and Perotti (2002), we have quantified the bias that would be introduced if we used all tax changes. We then show that, even in the category of exogenous tax changes, the size of the fiscal multiplier varies greatly depending on the exact political motivation. In line with existing theoretical arguments, these differences can be explained should we consider the nonlinear effects of tax burden on growth.

Guillermo Vuletin is a visiting economist in the research department of the Inter-American Development Bank. Non-resident member of the Global Economy and Development Program at the Brooking Institution and Visiting Professor at John Hopkins University’s School of Advanced International Studies. He is also Associate Editor of Economía, the Journal of the Latin American and Caribbean Economic Association (LACEA). He earned his PhD studies in Economics from the University of Maryland in 2007 and holds a master’s degree in economics from Universidad Nacional de La Plata, Argentina. His areas of interest are fiscal and monetary policies, in particular macroeconomic policy in emerging and developing countries. His works have been published in the Journal of Monetary Economics, the American Economic Journal, Economic Policy, and the Journal of Development Economic, among others. His research has also been quoted in the financial press, including The Economist, The Wall Street Journal, The Financial Times, and The Washington Post.

August 25th, 2016