Instruct: Identify the main and secondary category of Arxiv papers based on the titles and abstracts
Query: Heterogeneous Responses to the U.S. Narrative Tax Changes: Evidence from
  the U.S. States   This paper investigates the assumption of homogeneous effects of federal tax
changes across the U.S. states and identifies where and why that assumption may
not be valid. More specifically, what determines the transmission mechanism of
tax shocks at the state level? How vital are states' fiscal structures,
financial conditions, labor market rigidities, and industry mix? Do these
economic and structural characteristics drive the transmission mechanism of the
tax changes at the state level at different horizons? This study employs a
panel factor-augmented vector autoregression (FAVAR) technique to answer these
issues. The findings show that state economies respond homogeneously in terms
of employment and price levels; however, they react heterogeneously in real GDP
and personal income growth. In most states, these reactions are statistically
significant, and the heterogeneity in the effects of tax cuts is significantly
related to the state's fiscal structure, manufacturing and financial
composition, and the labor market's rigidity. A cross-state regression analysis
shows that states with higher tax elasticity, higher personal income tax,
strict labor market regulation, and economic policy uncertainties are
relatively less responsive to federal tax changes. In contrast, the magnitude
of the response in real GDP, personal income, and employment to tax cuts is
relatively higher in states with a larger share of finance, manufacturing,
lower tax burdens, and flexible credit markets.

1
The categories of this paper are: cs
10
The categories of this paper are: q-bio
9
The categories of this paper are: nlin
5
The categories of this paper are: gr-qc
16
The categories of this paper are: stat
37
The categories of this paper are: supr-con
15
The categories of this paper are: nucl-ex
11
The categories of this paper are: hep-lat
0
The categories of this paper are: hep-ph
4
The categories of this paper are: cond-mat
36
The categories of this paper are: cmp-lg
28
The categories of this paper are: alg-geom
34
The categories of this paper are: chem-ph
12
The categories of this paper are: nucl-th
29
The categories of this paper are: funct-an
33
The categories of this paper are: plasm-ph