a column by Scott Baker, Lorenz Kueng, Leslie McGranahan and Brian T. Melzer for VOX: CEPR’s Policy Portal
During and after the Global Crisis, economists and policymakers proposed a commitment to increase consumption taxes in the future as a way to shift consumption to the present.
This column tests the impact of this unconventional fiscal policy using data on car sales. It finds that households respond dramatically to planned tax increases, but this depends on them having access to credit so they can bring forward their spending.
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And bringing forward spending by using credit impacts on personal borrowing!
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