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“A Closer Look at Japan’s Rising Consumption Tax”

Summary:
That’s an important new Economic Brief by Thomas A. Lubik and Karl Rhodes of the Federal Reserve Bank of Richmond: Japan plans to raise its national consumption tax next week from 8 percent to 10 percent. Some commentators and economists have blamed previous consumption tax increases for causing recessions in 1997 and 2014, but little statistical analysis has been published to support or refute such claims. This Economic Brief  highlights new evidence that significant changes in Japan’s household consumption behavior did in fact coincide with the 1997 tax hike. This issue is important as Japan is on the cusp of raising its consumption tax in just a few days.

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That’s an important new Economic Brief by Thomas A. Lubik and Karl Rhodes of the Federal Reserve Bank of Richmond:

Japan plans to raise its national consumption tax next week from 8 percent to 10 percent. Some commentators and economists have blamed previous consumption tax increases for causing recessions in 1997 and 2014, but little statistical analysis has been published to support or refute such claims. This Economic Brief  highlights new evidence that significant changes in Japan’s household consumption behavior did in fact coincide with the 1997 tax hike.

This issue is important as Japan is on the cusp of raising its consumption tax in just a few days.

Menzie Chinn
He is Professor of Public Affairs and Economics at the University of Wisconsin, Madison

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