Journal Article

The effectiveness of economic policy and position in the cycle: the case of tax reductions on overtime in France

Eric Heyer

in Oxford Review of Economic Policy

Published on behalf of The Oxford Review of Economic Policy Ltd

Volume 27, issue 2, pages 364-379
Published in print July 2011 | ISSN: 0266-903X
Published online July 2011 | e-ISSN: 1460-2121 | DOI: https://dx.doi.org/10.1093/oxrep/grr012
The effectiveness of economic policy and position in the cycle: the case of tax reductions on overtime in France

More Like This

Show all results sharing these subjects:

  • Econometric and Statistical Methods and Methodology: General
  • Macroeconomics: Consumption, Saving, Production, Employment, and Investment
  • Labour and Demographic Economics
  • Prices, Business Fluctuations, and Cycles
  • Single Equation Models; Single Variables

GO

Show Summary Details

Preview

The economic situation of all the major developed countries has changed significantly during the 2007–10 period. Yet many economic policies have been kept in place. This is true in particular of a key measure in French government policy: tax reductions on overtime hours and their exemption from social charges. In this article we propose simulations of this scheme based on the economic context in which it is implemented. According to our simulations, this kind of measure is pro-cyclical and therefore poorly suited to the current situation of the French economy. Furthermore, even in the case of good conditions, the scheme would not be funded. Without financing, this measure would widen the deficit and would amount to a fiscal stimulus. Financing it through an increase in levies would radically change its nature.

Keywords: macroeconometric model; economic cycle; NAIRU; Phillips curve; hysteresis; C13; C22; E24; E32; J08

Journal Article.  6362 words.  Illustrated.

Subjects: Econometric and Statistical Methods and Methodology: General ; Macroeconomics: Consumption, Saving, Production, Employment, and Investment ; Labour and Demographic Economics ; Prices, Business Fluctuations, and Cycles ; Single Equation Models; Single Variables

Full text: subscription required

How to subscribe Recommend to my Librarian

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content. subscribe or login to access all content.