Summary
This paper tests Mankiw’s [9] revenue-smoothing hypothesis, that the inflation rate moves one-for-one with the marginal tax rate in the long run, using the new average marginal tax rate series constructed by Stephenson [16] and the long-horizon regression approach developed by Fisher and Seater [5]. It reports considerable evidence against revenuesmoothing.
Serletis gratefully acknowledges support from the Social Sciences and Humanities Research Council of Canada.
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsPreview
Unable to display preview. Download preview PDF.
References
Barro RJ, Sahasakul C (1983) Measuring the average marginal tax rate from the individual income tax. Journal of Business 56: 419–452
Dickey DA, Fuller WA (1981) Likelihood ratio statistics for autoregressive time series with a unit root. Econometrica 49: 1057–72
Engle RF, Granger CW (1987) Cointegration and error correction: Representation, estimation and testing. Econometrica 55: 251–276
Evans JL, Amey MC (1996) Seigniorage and tax smoothing: Testing the extended taxsmoothing model. Journal of Macroeconomics 18: 111–125
Fisher M, Seater J (1993) Long-run neutrality and superneutrality in an ARIMA framework. American Economic Review 83: 402–415
Ghosh AR (1995) Intertemporal tax-smoothing and the government budget surplus: Canada and the United States. Journal of Money, Credit, and Banking 27: 1033–1045
Kwiatkowski D, Phillips PCB, Schmidt P, Shin Y (1992) Testing the null hypothesis of stationarity against the alternative of a unit root. Journal of Econometrics 54: 159–178
MacKinnon JG (1994) Approximate asymptotic distribution functions for unit-root and cointegration tests. Journal of Business and Economic Statistics 12: 167–176
Mankiw NG (1987) The optimal collection of seigniorage: Theory and evidence. Journal of Monetary Economics 20: 327–341
Newey W, West K (1987) A simple positive semi-definite, heteroskedasticity and autocorrelation consistent covariance matrix. Econometrica 55: 703–708
Pantula SG, Gonzalez-Farias G, Fuller WA (1994) A comparison of unit-root test criteria. Journal of Business and Economic Statistics 12: 449–459
Phillips PCB (1987) Time series regression with a unit root. Econometrica 277–301
Phillips PCB, Perron P (1988) Testing for a unit root in time series regression. Biometrica 75: 335–346
Poterba JM, Rotemberg JJ (1990) Inflation and taxation with optimizing governments. Journal of Money, Credit, and Banking 22: 1–18
Serletis A, Schorn R (1999) International evidence on the tax-and revenue-smoothing hypotheses. Oxford Economic Papers 51: 387–396
Stephenson EF (1998) Average marginal tax rates revisited. Journal of Monetary Economics 41: 389–409
Trehan B, Walsh CE (1990) Seigniorage and tax smoothing in the United States: 1914–1986. Journal of Monetary Economics 25: 97–112
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2005 Springer-Verlag Berlin Heidelberg
About this chapter
Cite this chapter
Gogas, P., Serletis, A. (2005). Revenue Smoothing in an ARIMA Framework: Evidence from the United States. In: Diebolt, C., Kyrtsou, C. (eds) New Trends in Macroeconomics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/3-540-28556-3_5
Download citation
DOI: https://doi.org/10.1007/3-540-28556-3_5
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-540-21448-9
Online ISBN: 978-3-540-28556-4
eBook Packages: Business and EconomicsEconomics and Finance (R0)