TY  - UNPD
A1  - Lieberknecht, Philipp
A1  - Wieland, Volker
T1  - On the macroeconomic and fiscal effects of the tax cuts and jobs act
T2  - Working paper series / Institute for Monetary and Financial Stability ; 131
N2  - There is substantial disagreement about the consequences of the Tax Cuts and Jobs Act (TCJA) of 2017, which constitutes the most extensive tax reform in the United States in more than 30 years. Using a large-scale two-country dynamic general equilibrium model with nominal rigidities, we find that the TCJA increases GDP by about 2% in the medium-run and by about 2.5% in the long-run. The shortrun impact depends crucially on the degree and costs of variable capital utilization, with GDP effects ranging from 1 to 3%. At the same time, the TCJA does not pay for itself. In our analysis, the reform decreases tax revenues and raises the debt-to-GDP ratio by about 15 percentage points in the medium-run until 2025. We show that combining the TCJA with spending cuts can dampen the increase in government indebtedness without reducing its expansionary effect.
T3  - Working paper series / Institute for Monetary and Financial Stability - 131 
KW  - tax reform
KW  - corporate taxes
KW  - capital taxes
KW  - labor income taxes
KW  - spending cuts
KW  - fiscal stimulus
Y1  - 2019
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/50055
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-500552
UR  - https://www.imfs-frankfurt.de/fileadmin/user_upload/IMFS_WP_131.pdf
IS  - March 22, 2019
PB  - Johann Wolfgang Goethe-Univ., Inst. for Monetary and Financial Stability
CY  - Frankfurt am Main
ER  -