Unit sales and price effects of preannounced consumption tax reforms micro-level evidence from European VAT Thiess Buettner and Boryana Madzharova
By: Büttner, Thiess
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Contributor(s): Madzharova, Boryana.
Material type: 
ArticlePublisher: 2021Subject(s): CONSUMO | VENTAS | IMPUESTOS | AJUSTES FISCALES | INCIDENCIA Y TRASLACION | ESTADOS UNIDOS | IMPUESTO SOBRE EL VALOR AÑADIDO | UNION EUROPEA
In:
American Economic Journal : Economic Policy v. 13, n. 3, August 2021, p. 103-134 Summary: We study the effects of consumption tax changes on prices and unit sales of durables utilizing micro-level product data. The results show that tax rate changes are fully shifted into prices. An anticipated tax rate change causes a temporary shift in unit sales shortly before implementation, which is more than offset by adjustments upon and after implementation. If the tax rate increases by 1 percentage point, unit sales rise by 2.5 percent on average in the last month before implementation. The permanent effect is a drop in sales by 2 percent below their original level, implying relatively strong intertemporal substitution effects.
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We study the effects of consumption tax changes on prices and unit sales of durables utilizing micro-level product data. The results show that tax rate changes are fully shifted into prices. An anticipated tax rate change causes a temporary shift in unit sales shortly before implementation, which is more than offset by adjustments upon and after implementation. If the tax rate increases by 1 percentage point, unit sales rise by 2.5 percent on average in the last month before implementation. The permanent effect is a drop in sales by 2 percent below their original level, implying relatively strong intertemporal substitution effects.
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