Tax Policy And the Macroeconomy : Stabilization, Growth, And Income Distribution : Scheduled for Hearings Before the House Committee On Ways And Means On December 17-18, 1991 Jcs-18-91

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Lucas, "Econometric Policy Evaluation: A Critique," Journal of Monetary Economics, Suppl. Series, 1976, Vol. 1, pp. 19-46.
■*^ See Gary Fromm and Lawrence R. Klein, "A Comparison of Eleven Econometric Models of the United States," American Economic Review, vol. 63 (May, 1973), p. 392, Table 6.
^° "Okun's law" (named after Arthur M. Okun, former Chairman of the Council of Economic Advisors) is the empirical relationship between a percentage change increase in GNP and a per- centage point decline
... in the unemployment rate. It has been estimated that a one percent in- crease in GNP translates into 0.5 percentage point decline in the unemployment rate. See, George Perry, "Potential Output and Productivity," Brookings Papers on Economic Activity, vol.
8, no. 1 (1977), p. 11-47.
^' The policy implementation lag could be reduced by structural changes in the tax policy- making process. For example, tax cuts, whose form could be agreed upon in advance, could be made contingent upon triggers in certain economic indicators, for example, two successive quar- ters lacking real economic growth.


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