The International Transmission of US Tax Shocks: A Proxy-SVAR Approach

We investigate the international propagation of tax rate shocks originating in USA using a global vector error correction model. identify to corporate and personal income rates by narrative series as external instruments, following proxy-SVAR methodology. The main results are following: (1) In terms fiscal multiplier, domestic effects stronger than those shock; (2) spillovers most cases positive significant, albeit small size; (3) boost exports recipient economies, stimulated both US demand and, lesser extent, real exchange depreciation, is transmission channel; financial channels (through long-term interest rates) also play role.