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Working Paper
Spending responses to state sales tax holidays
Every year over 20 states offer sales tax holidays (STHs) on specific items like clothes, shoes and other items to encourage consumption, affecting over 100 million consumers. We use a unique dataset of credit cards transaction to study the spending response to these holidays. Using a diff-in-diff methodology, we find that STHs increase overall daily spending by 8%, with large percentage increases in spending on children?s clothes and shoes of 193% and 98% respectively. Consumers with children increase spending more during STHs. Our estimates of price elasticities range from 6 for big box ...
Newsletter
The Fiscal Cliff and the Dynamics of Income
At the end of 2012, certain income tax policies were set to end and others to become effective. Central among these was the planned expiration of the 2001 and 2003 tax cuts (the ?Bush tax cuts?), which had been extended for two years in 2010.
Journal Article
Unprepared for boom or bust: understanding the current state fiscal crisis
The headlines concerning state government finances have become increasingly alarming since mid-2001. This article discusses the roots of the current state fiscal crisis by looking at the decisions made by state government leaders during the long expansion. The author suggests increased use of rainy day funds as a way to avoid future crisis.
Working Paper
The incidence of inflation: inflation experiences by demographic group: 1981-2004
We use data from the Consumer Expenditure Survey from 1980-2003 combined with item specific Consumer Price Index data to calculate monthly chain-weighted inflation measures for thirteen different demographic groups and for the overall urban population from 1981-2004. We find that the inflation experiences of the different groups are very highly correlated with and similar in magnitude to the inflation experiences of the overall urban population. Over the sample period, cumulative inflation for the groups ranged from 224% to 242% as compared to inflation for the overall population of 230%. The ...
Working Paper
The earned income credit and durable goods purchase
Working Paper
Charity and the bequests motive: evidence from seventeenth century wills
This paper researches the motivations for charitable bequests by looking at gifts to the poor in the wills of 1357 testators who died in Suffolk, England in the 1620's and 1630's. I find that wealth, religiosity, and the presence of family and friends influence testator generosity. The finding that wealthier, more religious individuals, and those with fewer children give more to the poor support an altruistic model of testator utility. However, the finding that individuals who give to more people outside of their immediate families are more likely to give to the poor contradicts the simple ...
Working Paper
Revenue bubbles and structural deficits: What’s a state to do?
The 2001 recession proved alarming to state government finances. A relatively shallow national recession led to a severe downturn in state revenues that took three years to unwind. In the current economic downturn, early signs of fiscal stress are already apparent. This raises several fundamental questions: * Since 1984 the U.S. macroeconomy entered into the "Great Moderation" in which economic volatility was reduced. Has state revenue volatility relative to the business cycle increased during this period? * Has the composition of state revenues and expenditures made states more susceptible ...
Working Paper
The effect of sales tax holidays on household consumption patterns
Sales tax holidays (STHs) are the temporary suspension of state (and some local) sales taxes on selected retail items for a brief period of time. The policy has gained popularity in recent years, beginning in one state in 1997 and growing to twenty by 2008. Despite the increased frequency with which states use STHs, little research has been conducted to study how households respond to this temporary tax manipulation. Our paper offers the first household-level, microeconometric evaluation on the effect of STHs on household consumption patterns. We find that on STHs, households increase the ...
Journal Article
Measuring Fiscal Impetus: The Great Recession in Historical Context
The authors use a measure of fiscal impetus to examine how fiscal policy has behaved during business cycles in the past, how it responded to the most recent recession, and how it is likely to evolve over the next several years. They find that policy was more expansionary than average during the 2007 recession and has been significantly more contractionary than average during the recovery. By the end of 2012, fiscal impetus was below its historical business-cycle average and it is forecast to remain depressed well into the future.
Journal Article
The determinants of state foreclosure rates: investigating the case of Indiana
Foreclosure rates are defined as mortgages in the foreclosure process as a percentage of all mortgages. These rates vary fairly dramatically across states. While the average foreclosure rate in the 50 states and the District of Columbia in the second quarter of 2007 was 1.25 percent, these rates ranged from a high of 3.60 percent in Ohio to a low of 0.44 percent in Wyoming. One state that has exhibited high foreclosure rates over the past decade is Indiana. Indiana ranked second highest after Ohio in the second quarter of 2007 with a foreclosure rate of 3.01 percent. The goal of this article ...