Inflation Smoothing and the Modest Effect of VAT in Germany / Stephan Danninger, Alina Carare.

Format:

Book

Government document

Author/Creator:

Danninger, Stephan.

Contributor:

Carare, Alina.

Series:

IMF Working Papers; Working Paper ; No. 2008/175

IMF working paper ; WP/08/175

IMF Working Papers

Language:

English

Subjects (All):

Inflation (Finance)--Germany.

Inflation (Finance).

Value-added tax--Germany.

Value-added tax.

Inflation (Finance)--Germany--Econometric models.

Value-added tax--Germany--Econometric models.

Physical Description:

1 online resource (23 p.)

Edition:

1st ed.

Place of Publication:

Washington, D.C. : International Monetary Fund, 2008.

Language Note:

English

Summary:

Increases in German core inflation following the 2007 VAT hike were smaller than expected, leading to speculation about delayed inflationary effects. This paper argues to the contrary that price increases in advance of the VAT hike explain the small increase upon implementation. We find that core inflation rose by 0.36 percentage point in the run up and by a further 0.40 percentage point at the time of the VAT hike. Cumulatively, the tax hike contributed to two thirds of the increase in core inflation in 2006-07 at an estimated pass-through of 73 percent. Most of the increase in 2006 was of general nature, while about one sixth can be attributed to durable goods and items with low degree of competition.

Contents:

Contents; I. Introduction; II. Stylized Facts and Rationale for Inflation Smoothing; III. Empirical Analysis; IV. Conclusions; References; Appendix; I. Data; II. Method; III. Calculating The Effect on Core Inflation

Notes:

Description based upon print version of record.

Includes bibliographical references.

Description based on online resource; title from PDF front page (ebrary, viewed February 26, 2014).

ISBN:

9786612841262

9781462358823

1462358829

9781452796505

1452796505

9781451870336

1451870337

9781282841260

1282841262

OCLC:

762926226