Holmes, James M.; Smyth, David J.; Hutton, Patricia A - In: Pacific Economic Review 9 (2004) 1, pp. 75-79
This paper analyzes the short-run effects of a consumption tax increase (VAT or national sale tax) on aggregate demand. Because it increases the prices paid by consumers relative to the prices received by suppliers, a consumption tax affects the supply of real money balances, in addition to...