Author: Mary Eschelbach Hansen
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Technical Note on Estimating the Overall Effect of Corporate Tax Reforms
This technical note first describes key differences between estimating the impact of a change in tax policy at the firm (microeconomic) level and at the overall (macroeconomic) level. It then explains how macroeconomic models are used to infer the overall effects of policy reforms and how alternative assumptions – such as the presence of market…
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Assessing the Effects of a Dividend and Capital Gains Tax Increase
This brief provides a new analysis of the macroeconomic effects of raising taxes on dividend income and capital gains. Increasing dividend income and capital gains taxes from 20% to 39.6% for households earning over $1 million would raise government revenue by about 5% and GDP by about 1% in the long term. The proposed tax increase…
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Capacity Utilization, Markup Cyclicality, and Inflation Dynamics
This academic paper studies the relationship between firms’ decisions about capacity, its utilization, and inflation. To do this, we introduce endogenous capacity utilization into a New Keynesian (NK) model. In our model, firms set capacity under demand uncertainty, utilizing both an effort margin and capacity expansion to meet demand. This mechanism implies that firm-level productivity and desired…
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Inequality and the Macroeconomy: Academic and Policy Challenges | April 2024
IMPA celebrated its first anniversary on April 17, 2024, with a colloquium on Inequality and the Macroeconomy: Academic and Policy Challenges.
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Workshop on Post-Pandemic Macroeconomics | March 2024
Together with Columbia University’s Institute for Policy Dialogue and Center for Political Economy, IMPA co-sponsored the Workshop on Post-Pandemic Macroeconomics, held at Columbia’s School of International and Public Affairs on March 22-23, 2024.
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Repealing the Clean Energy Credits: A Macroeconomic Assessment of the GOP Proposal
This brief explains a new analysis of a Republican proposal to repeal the clean energy credits from the 2022 Inflation Reduction Act. The analysis finds that withdrawal of the clean energy credits would reduce GDP by approximately 2% in the long run from its anticipated level under current policy, while depressing employment and wages by…
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Symposium on Tax Policy in an Unequal Economy | April 2023
“The Symposium on Tax Policy in an Unequal Economy,” held at American University, was IMPA’s inaugural event.
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Corporate Taxation and Market Power Wealth
This academic paper studies the aggregate and distributional effects of corporate tax reforms when market power is heterogeneous across sectors and firms. We use a life-cycle model with incomplete markets in which capital and equity do not always move in tandem when corporate tax policy changes. On the one hand, the increase in the tax rate causes…
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New Macroeconomic Model Shows TCJA Corporate Tax Cut was Harmful to the Economy in both Aggregate and Distributional Terms
This brief explains IMPA’s analysis of the corporate tax cuts in the Tax Cuts and Jobs Act (TCJA). IMPA’s analysis accurately predicts the growth in investment, output, jobs, and wages that followed its enactment.
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Policy Perspectives on Market Power | March 2023
IMPA’s “Policy Perspectives on Market Power” was a small, high-powered conference that featured research presentations and wide-ranging discussions on the most crucial implications of market power for policymaking. The event aimed to provide a forum for leading policymakers and academics to present and discuss the causes and consequences of market power, focusing on the outcomes…