What goes up may not come down asymmetric incidence of value-added taxes Youssef Benzarti, Dorian Carloni, Jarkko Harju, Tuomas Kosonen
Contributor(s): Benzarti, Youssef
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Material type: 
ArticlePublisher: 2020Subject(s): IMPUESTO SOBRE EL VALOR AÑADIDO | INCIDENCIA Y TRASLACION | PRECIOSOnline resources: Click here to access online
In:
Journal of Political Economy v. 128, n. 12, December 2020, p. 4438-4474Summary: This paper provides evidence that prices respond significantly more strongly to increases than to decreases in value-added taxes (VATs). First, using two plausibly exogenous VAT changes, we show that prices respond twice as much to VAT increases as to VAT decreases. Second, we show that this asymmetry results in higher equilibrium profits and markups. Third, we find that firms operating with low profit margins are particularly likely to respond asymmetrically to VAT changes. Fourth, these asymmetric price effects persist several years after VAT changes take place. Fifth, using all VAT changes in the European Union from
1996 to 2015, we find similar levels of asymmetry.
| Item type | Current location | Home library | Call number | Status | Date due | Barcode |
|---|---|---|---|---|---|---|
| Artículos | IEF | IEF | OP 229/2020/12-1 (Browse shelf) | Available | OP 229/2020/12-1 |
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This paper provides evidence that prices respond significantly more strongly to increases than to decreases in value-added taxes (VATs). First, using two plausibly exogenous VAT changes, we show that prices respond twice as much to VAT increases as to VAT decreases. Second, we show that this asymmetry results in higher equilibrium profits and markups. Third, we find that firms operating with low profit margins are particularly likely to respond asymmetrically to VAT changes. Fourth, these asymmetric price effects persist several years after VAT changes take place. Fifth, using all VAT changes in the European Union from
1996 to 2015, we find similar levels of asymmetry.
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