Tax Cuts and Economic Activity: Israel in the 2000s

תקציר

This paper evaluates the quantitative macroeconomic effects of the persistent decline of income and corporate tax rates in Israel during the 2000s. The analysis is based on the simulation of a calibrated model, given a parameterized version of the tax rates process in this period. The results indicate an important contribution of the tax process to the expansion of GDP during the 2000s.