Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/60625 
Year of Publication: 
2004
Series/Report no.: 
Staff Report No. 188
Publisher: 
Federal Reserve Bank of New York, New York, NY
Abstract: 
This paper examines the linkage between economic activity and tax revenues for New York State and New York City. Drawing upon the methodology of Stock and Watson, we use a dynamic single-factor model to estimate indexes of coincident economic indicators. We also construct measures of the sales and withholding tax bases. To conduct an empirical analysis of the relationship between the indexes of economic activity and the tax base series, we use vector autoregression and error correction models. The results provide strong evidence that the coincident indexes contain useful information for explaining monthly growth in the tax bases. However, much less evidence exists of a statistically significant linkage from the tax bases to the coincident indexes.
JEL: 
C32
E32
H71
Document Type: 
Working Paper

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