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Do anticipated tax changes matter? Further evidence from the United Kingdom

Bagliano, F. (1993) Do anticipated tax changes matter? Further evidence from the United Kingdom. CEP discussion paper, 123. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Identification Number: 123

Abstract

This paper provides some evidence against the rational expectations-permanent income model of consumption behaviour and the Ricardian Equivalence proposition by testing the responsiveness of spending to the implementation of pre-announced changes in income tax. Extending the work of Summer (1991), a long series of recurrent episodes of this kind is for the U.K (1960-1990) is examined. It is found that consumption expenditure strongly reacts to (pre-announced) fiscally-induced changes in current disposable income. This effect is due to the semi-durable and durable components of spending.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk
Additional Information: © 1993 F.Bagliano
Subjects: H Social Sciences > HJ Public Finance
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Series: Working Papers > CEP Discussion Papers
Date Deposited: 20 Aug 2008 09:29
Last Modified: 03 Mar 2013 10:14
URI: http://eprints.lse.ac.uk/id/eprint/20992

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