Publication type
Journal Article
Authors
Publication date
May 9, 2016
Summary:
Using a new narrative measure of fiscal policy shocks for the U.K., we show that households with mortgage debt exhibit large and significant consumption responses to tax changes. Homeowners without a mortgage, in contrast, do not adjust their expenditure, with responses not statistically different from zero at all horizons. We compare our findings to the predictions of traditional and newer theories of liquidity constraints, providing a novel interpretation for the aggregate effects of tax changes on the macroeconomy.
Published in
Review of Economic Studies
DOI
http://dx.doi.org/10.1093/restud/rdw021
ISSN
346527
Subjects
Notes
Online Early
#523756