The Degree of Fiscal Illusion in Interest Rates: Some Direct Estimates / Joe Peek, James A. Wilcox.

Format:

Book

Author/Creator:

Peek, Joe.

Contributor:

National Bureau of Economic Research.

Wilcox, James A.

Series:

Working Paper Series (National Bureau of Economic Research) no. w1358.

NBER working paper series no. w1358

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

The Degree of Fiscal Illusion in Interest Rates

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1984.

Summary:

This article demonstrates why the procedures used in previous studies do not permit inference about the relationship between interestrates and taxes. We present a model that leads to direct estimates of the degree to which interest rates respond to changes in tax rates. The empirical results imply that the adjustment of taxable interest rates has been large enough to render after-tax yields impervious to tax rate changes. Further, tax-exempt yields are unaffected by changes in taxrates. Thus, there is no evidence of fiscal illusion in interest rates.

Notes:

Print version record

May 1984.