The United Kingdom employed the McKenna rule to conduct fiscal policy during World War I (WWI) and the interwar period. Named for Reginald McKenna, Chancellor of the Exchequer (1915–16), the McKenna rule committed the United Kingdom to a path of debt retirement, which we show was...

This paper analyzes the role of nominal assets in ranking intertemporal budget policies in a growing open economy. The budget policies are ranked in terms of the public's intertemporal stock of tax liabilities. Our main result is that, in a small open economy, the valuation of private and public...

In a dynamic model of fiscal policy, social polarization provokes a deficit bias. Policy advisors have recently proposed that governments running a deficit should be forced to generate additional tax revenue. We show that this deficit taxation reduces the deficit bias as it internalizes the...

The empirical literature using vector autoregressive models to assess the effects of fiscal policy shocks strongly disagrees on even the qualitative response of key macroeconomic variables to government spending and tax shocks. We provide new evidence for the U.S. over the period 1955-2006. We...

In recent years a number of European countries have shifted their tax structure more strongly towards indirect taxes, motivated, inter alia, by the intention to foster competitiveness. Against this background, this paper develops a tractable two-country model of a monetary union, characterised...

Im April dieses Jahres hat das Bundesverfassungsgericht die derzeit gültigen Vorschriften für die Bemessung der Grundsteuer für verfassungswidrig erklärt. Der Gesetzgeber wurde beauftragt, bis zum 31. Dezember 2019 eine Neuregelung zu treffen. Die Forschungsgruppe Steuer- und Finanzpolitik...

Die Steuer- und Finanzpolitik legt die Grundlagen für eine erfolgreiche Aufgabenerfüllung des Staates. Wie wird in den nächsten Jahren die Steuer- und Finanzpolitik gestaltet werden? Wo liegen die Probleme? Wo sehen Wissenschaft, Handwerk und Politik Handlungsbedarf? Um diese Fragen zu...

We apply non-linear error-correction models to the empirical testing of the sustainability of the government's intertemporal budget constraint. Our empirical analysis, based on Italy, shows that the Italian government is meeting its intertemporal budget constraint, in spite of the high levels of...

This paper investigates the impact of fiscal policy on profits using panel data for 19 high-income OECD countries during the period 1975-1999. We estimate a profit equation in which profits depend on a set of fiscal variables. Our empirical method is based on a consistent treatment of the...