This paper evaluates a novel form of fiscal stimulus: a temporary cut in the rate of Value Added Tax (VAT). In December 2008, the UK cut the standard rate of VAT by 2.5 percentage points for 13 months in an effort to stimulate spending. We estimate the effect of the cut on prices and spending...

We study the persistent effects of temporary changes in U.S. federal corporate and personal income tax rates using a narrative identification approach. A corporate income tax cut leads to a sustained increase in GDP and productivity, with peak effects between five and eight years. R&D spending...

This paper presents new survey evidence on workers' response to the 2011 payroll tax cuts. While workers intended to spend 10 to 18 percent of their tax-cut income, they reported actually spending 28 to 43 percent of the funds. This is higher than estimates from studies of recent tax cuts, and...

We study the effects of corporate taxes on income inequality. Using state corporate taxes as a setting, we provide evidence that corporate tax cuts lead to increases in income inequality. This result is robust across regression, matching, and synthetic controls approaches, and to controlling for...

Payments and discounts incentivize participation in many transactions about which people know little, but can learn more --- payments for medical trial participation, signing bonuses for job applicants, or price rebates on consumer durables. Who opts into the transaction when given such...

Economic inequality may fuel frustration, possibly leading to anger and antisocial behavior. We experimentally study a situation where only the rich can reduce inequality while the poor can express their discontent by destroying the wealth of a rich counterpart with whom they had no previous...

Economic inequality may fuel frustration, possibly leading to anger and antisocial behavior. We experimentally study a situation where only the rich can reduce inequality while the poor can express their discontent by destroying the wealth of a rich counterpart with whom they had no previous...

Narratives pervade almost any aspect of our life and play a particularly important role in moral and prosocial decision-making. We study how positive (stories in favor of a prosocial action) and negative (stories in favor of a selfish action) narratives influence prosocial behavior. Our main...

Aggressive behavior against out-group members often rises during periods of economic hardship and health pandemics. Here, we test the widespread concern that the Covid-19 crisis may fuel hostility against people from other nations or ethnic minorities. Using a controlled money-burning task, we...