Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/232451 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 8854
Publisher: 
Center for Economic Studies and Ifo Institute (CESifo), Munich
Abstract: 
We study the impact of fiscal revenue shocks on local fiscal policy. We focus on the very volatile revenues from the immovable property gains tax in the canton of Zurich, Switzerland, and analyze fiscal behavior following large and rare positive and negative revenue shocks. We apply causal machine learning strategies and implement the post-double-selection LASSO estimator to identify the causal effect of revenue shocks on public finances. We show that local policymakers overall predominantly smooth fiscal shocks. However, we also find some patterns consistent with fiscal conservatism, where positive shocks are smoothed, while negative ones are mitigated by spending cuts.
Subjects: 
local public finance
fiscal policy
fiscal shocks
JEL: 
D70
H11
H71
H72
Document Type: 
Working Paper
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