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A Note on Tax Multiplier
Chang, Wen-ya | Lai, Ching-chong
Credit and Capital Markets – Kredit und Kapital, Vol. 23 (1990), Iss. 3 : pp. 351–357
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Wen-ya Chang, Taiwan
Ching-chong Lai, Taiwan
References
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Google Scholar -
Boskin, M. J.: "Taxation, Saving, and the Rate of Interest," Journal of Political Economy, Vol. 86 (April 1978), pp. 25 – 53.
Google Scholar -
Carlino, G. A.: "Interest Rate Effects and Intertemporal Consumption," Journal of Monetary Economics, Vol. 9 (March 1982), pp. 223 – 234.
Google Scholar -
Cebula, Richard J.: "A Brief Note on Economic Policy Effectiveness," Southern Economic Journal, Vol. 43 (October 1976), pp. 1174 – 1176.
Google Scholar -
Clark, P. K.: "Investment in the 1970s: Theory, Performance, and Prediction," Brooking Papers on Economic Activity, (1979), pp. 73 – 113.
Google Scholar -
Holmes, James M. and Smyth, David J.: "The Specification of the Demand for Money and the Tax Multiplier," Journal of Political Economy, Vol. 80 (1972), pp. 179 – 185.
Google Scholar -
Jaeger, Klaus: "Economic Policy Effectiveness in Hicksian Analysis: A Note," Kredit und Kapital, 14. Jahrg. (1981), pp.177 – 179.
Google Scholar -
Lai, Ching-chong, and Chang, Wen-ya: "Currency Devaluation with Flexible Wages: An Application of the Cebula Model," Journal of Macroeconomics, Vol. 9 (Fall 1987), pp. 625 – 635.
Google Scholar -
Tavlas, George S.: "Economic Policy Effectiveness in Hicksian Analysis: An Extension," Kredit und Kapital, 13. Jahrg. (1980), pp. 252 – 262.
Google Scholar
Abstract
A Note on Tax Multiplier
The conclusion of Holmes and Smyth (1972), which has received wide attention in the literature, indicates that a tax cut policy may depress domestic output if the money demand function is determined by disposable income rather than national income. This paper adopts the Cebula (1976) specification of the consumption and investment functions, and finds that the Holmes-Smyth assertion is not valid under this amended framework.