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Original paper

What Goes Up May Not Come Down: Asymmetric Incidence of Value-Added Taxes

Volume: 128, Issue: 12, Pages: 4438 - 4474
Published: Jun 29, 2020
Abstract
This paper provides evidence that prices respond significantly more strongly to increases than to decreases in value-added taxes (VATs). First, using two plausibly exogenous VAT changes, we show that prices respond twice as much to VAT increases as to VAT decreases. Second, we show that this asymmetry results in higher equilibrium profits and markups. Third, we find that firms operating with low profit margins are particularly likely to respond...
Paper Details
Title
What Goes Up May Not Come Down: Asymmetric Incidence of Value-Added Taxes
Published Date
Jun 29, 2020
Volume
128
Issue
12
Pages
4438 - 4474
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