Estado:

Aprovado

Começa:

19 de Junho de 2024, 12:00

Termina:

19 de Junho de 2024, 13:00

Recursos:

PT

Tema

“A Temporary VAT Cut in Three Acts: Announcement, Implementation, and Reversal”

We investigate the pass-through of a Value-Added Tax (VAT) decrease to consumer prices, using Portugal's temporary cut in VAT for a subset of food items in 2023 as a laboratory. Exploiting a novel high-frequency dataset of online retail prices, we use an event study approach to analyze price dynamics across the complete policy lifetime. We find that prices rose by around 1% upon announcement, that the pass-through was almost complete when the policy was implemented, and that the pass-through was approximately 70% at the reversal of the policy. The price reduction was highly persistent over the entire duration of the policy. We estimate that the policy decreased month-on-month inflation by 0.7 percentage points. We find evidence of deflation in producer prices around the implementation, which could be a potential mechanism driving the high pass-through.

Speakers

Tiago Bernardino is a PhD candidate at the Institute for International Economic Studies of Stockholm University. His main research interests are Macroeconomics, with a focus on Fiscal and Monetary Policy, and Public Finance. Before starting the PhD he worked as a Research Assistant and a Teaching Assistant at Nova SBE, from where he holds a BSc and a MSc in Economics.

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