IESET.
Hypotheses·fiscal·tcja_2017_growth_effect

Trump's 2017 Tax Cuts and Jobs Act produced smaller investment and output responses than Laffer-curve advocates projected, consistent with New Keynesian estimates of corporate-tax-cut passthrough in a near-full-employment economy with inelastic long-run investment supply.

The discriminating test is whether the investment-to-output and output-to-tax-rate elasticities sit inside the canonical NK range or the supply-side range projected by TCJA proponents.

WEAKENEDengine/runs/tcja_2017_growth_effect

WEAKENED — GDP gate clears at 0.97pp and PNFI is -3.73% below pretrend; EMTR-elasticity gate not loaded

confidence cueThis test cuts against the claim as written or misses its pre-declared threshold.

policy briefNeeds review

In ordinary language

In plain terms, this asks whether tcja post 2017q4 indicator is actually linked to better or worse log real income from 2010 to 2019.

plain answer

GDP gate clears at 0.97pp and PNFI is -3.73% below pretrend; EMTR-elasticity gate not loaded

why it matters

This matters because fiscal claims should change belief only when they survive a pre-declared empirical test.

how the test works

It compares 1 country or place units from 2010 to 2019, using a local projections design, with fixed effects for year.

what was measured
What changed
  • Tcja post 2017q4 indicator
  • Effective marginal corporate tax rate
What we checked
  • Log real income
  • Log real private nonresidential investment
  • Corporate investment share income
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

5 input datasets, 0 unresolved missing series, provenance status: reproducible hash verified.

Results

engine/runs/tcja_2017_growth_effect
1007550250201020152019USA
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show log_real_gdp across 1 sampled countries over 2010–2019.
The shapes above are stylised — none of the lines are real data.
Placeholder for tcja_2017_growth_effect. Published chart will be generated from engine/runs/tcja_2017_growth_effect/chart_data.json.

Who has skin in the game — schools predicting on this

1 school list this hypothesis as a test of their position. The chips below are school-level scoreboard outcomes, not a second hypothesis verdict.

hypothesis verdict vs scoreboard outcome

The banner verdict judges this hypothesis as written. The scoreboard asks whether each school's polarity-corrected prediction was right. Raw status is not a school win: SUPPORTED supports schools that needed SUPPORTED, but refutes schools that needed REFUTED.

New Keynesian (mainstream synthesis)wins if MIXEDpartial/no-call

Pre-registration

registration ordering unverified
first-spec commit 4c8ce8e · 2026-07-18T22:11:21Z
run generated · 2026-05-18T20:09:44Z
Run timestamp predates this path's first git-add commit (rebase, rename, or pre-git local run). Spec hash is still the path's first-add commit — not repository HEAD — but ordering is not a clean pre-registration proof.

Trump's 2017 Tax Cuts and Jobs Act produced smaller investment and output responses than Laffer-curve advocates projected, consistent with New Keynesian estimates of corporate-tax-cut passthrough in a near-full-employment economy with inelastic long-run investment supply. The discriminating test is whether the investment-to-output and output-to-tax-rate elasticities sit inside the canonical NK range or the supply-side range projected by TCJA proponents.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

The hypothesis is SUPPORTED if corporate investment elasticity to the effective marginal tax rate falls inside the NK canonical range (≈ -0.1 to -0.3) rather than the supply-side range (≤ -0.5), AND if cumulative real-GDP deviation from pre-TCJA trend over 2018-2019 (pre-COVID) is less than 1 percentage point. REFUTED if elasticity exceeds -0.5 in absolute value or if cumulative GDP gain exceeds 2.5 percentage points over trend.

formal test & threshold
test:      US time-series 2010-2019 estimating corporate investment elasticity to effective-marginal-tax-rate around 2017Q4 break + cumulative real-GDP deviation from pre-TCJA CBO baseline 2018-2019 (pre-COVID). Refute if elasticity ≤-0.5 absolute OR GDP-trend deviation >2.5pp.

Method

Template
local_projections
Fixed effects
year
Clustering
year
Sample
1 countries · 2010 – 2019
Evidence type
associational

US time-series local projections 2010-2019 (pre-COVID) estimating corporate-investment elasticity to effective-marginal-tax-rate around 2017Q4 TCJA break, plus cumulative real-GDP deviation from pre-TCJA CBO baseline. Newey-West HAC SEs. Caveat: 2-year pre-COVID window is short for stable elasticity estimation; primary spec drops 2020+; secondary spec extends through 2021 with COVID-control dummies.

Data

VariableSourceTransform
log_real_gdp
outcome
fred:GDPC1tier 1
log
log_real_private_nonresidential_investment
outcome
fred:PNFItier 1
log
corporate_investment_share_gdp
outcome
fred:Y033RC1Q027SBEAtier 1
level
tcja_post_2017q4_indicator
treatment
constructed:indicator = 1 for quarters >= 2017Q4 (TCJA enactment Dec 2017).tier 5
indicator
effective_marginal_corporate_tax_rate
treatment
constructed:hand-coded EMTR (Devereux-Griffith methodology) US corporate, pre-vs-post-TCJA. Treasury OTA + Tax Foundation cross-refetier 5
level
federal_funds_rate
control
fred:FEDFUNDStier 1
level
log_oil_price_brent
control
imf_pcps:POILBREtier 1
log

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — tcja_2017_growth_effect

Verdict: WEAKENED — GDP gate clears at 0.97pp and PNFI is -3.73% below pretrend; EMTR-elasticity gate not loaded

Pre-registration

  • Claim: Trump's 2017 Tax Cuts and Jobs Act produced smaller investment and output responses than Laffer-curve advocates projected, consistent with New Keynesian estimates of corporate-tax-cut passthrough in a near-full-employment economy with inelastic long-run investment supply. The discriminating test is whether the investment-to-output and output-to-tax-rate elasticities sit inside the canonical NK range or the supply-side range projected by TCJA proponents.
  • Falsification rule: The hypothesis is SUPPORTED if corporate investment elasticity to the effective marginal tax rate falls inside the NK canonical range (≈ -0.1 to -0.3) rather than the supply-side range (≤ -0.5), AND if cumulative real-GDP deviation from pre-TCJA trend over 2018-2019 (pre-COVID) is less than 1 percentage point. REFUTED if elasticity exceeds -0.5 in absolute value or if cumulative GDP gain exceeds 2.5 percentage points over trend.

Threshold Check

  • Method: log-linear 2010Q1-2017Q3 pretrend projected over 2018Q1-2019Q4
  • Real GDP cumulative 2018-2019 gap vs pre-TCJA trend: +0.97pp
  • Private nonresidential investment mean 2018-2019 gap vs pre-TCJA trend: -3.73%
  • GDP support gate (<1pp): True
  • GDP refutation gate (>2.5pp): False
  • EMTR elasticity gate loaded: False
  • EMTR note: No machine-readable TCJA EMTR vintage is loaded; PNFI relative-to-pretrend is reported as an investment-response diagnostic, not the registered elasticity.

Variables resolved

  • fred:GDPC1 → log_real_gdp (outcome, n=80)
  • fred:PNFI → log_real_private_nonresidential_investment (outcome, n=79)
  • fred:Y033RC1Q027SBEA → corporate_investment_share_gdp (outcome, n=79)
  • constructed: indicator = 1 for quarters >= 2017Q4 (TCJA enactment Dec 2017). → tcja_post_2017q4_indicator (treatment, n=10)
  • constructed: hand-coded EMTR (Devereux-Griffith methodology) US corporate, pre-vs-post-TCJA. Treasury OTA + Tax Foundation cross-reference. → effective_marginal_corporate_tax_rate (treatment, n=10)
  • fred:FEDFUNDS → federal_funds_rate (controls, n=73)
  • imf_pcps:POILBRE → log_oil_price_brent (controls, n=37)

Generated by scripts/run_local_projections.py at 2026-05-18T20:09:44+00:00

Notes

Maps the new-keynesian school's TCJA-2017 modest-response claim to a US time-series with elasticity-band falsification thresholds. Estimator and prior set; full pre-registration awaits steelman + human sign-off.

Authored framework. Read the transparency note.