Policy Regularity and Characteristics of Changes in Tax Revenues Size and Macroeconomic Stability in China
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| Title | Policy Regularity and Characteristics of Changes in Tax Revenues Size and Macroeconomic Stability in China
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| Author | Jia Junxue |
| Organization | Renmin University of China |
| Email | jiajunx@ruc.edu.cn |
| Key Words | Tax Revenue Size; Taxation Policy Rule; Macroeconomic Stability; Debt Sustainability |
| Abstract | Using quarterly data in the period 1992-2009, this paper investigates the policy regularity and characteristics of the changes in the size of tax revenue, and its effects on macroeconomic stability and debt sustainability in China. This paper finds that the behaviors of the size of tax revenue in China can be adequately described in terms of a simple policy rule function. Taxation policy tends to be active and procyclical in the pre-1998 period, and switches thereafter to be passive and countercyclical, indicating that the rapid growth of tax revenues since the mid-1990s is mainly due to the regime switch in taxation policy, which is helpful for macroeconomic stability and debt sustainability. Further analysis shows that taxation and monetary policies switch well synchronously during the period 1998-2007, but appear in mismatch in the pre-1998 and post-2008 periods. |
| Serial Number | WP241 |
| Time | 2012-03-31 |
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