This paper evaluates the temporary VAT reduction invoked by the German government over the third and fourth quarter of 2020 as part of the COVID-19 stimulus package. There is considerable controversy. Critics argue that VAT reductions are ineffective in the presence of lockdown measures in place...

Motivated by fiscal austerity and the surge in emigration in Europe's periphery during the Great Recession Bandeira, Caballé and Vella study a particular type of fiscal consolidation: the one carried out through an increase in consumption tax rates. Using a small open economy model with search...