Trump's tax reform: not very effective and at the wrong time

The growth effects of the US tax reform which was passed at the end of 2017 have been rather moderate so far. Private non-residential investment increased very strongly in 2018 but that was also part of a recovery trend after 2016. Private consumption grew in 2018 at roughly the same pace as in the two previous years. One explanation for the moderate effect of the reform is that fiscal stimulus measures are less effective in periods of economic expansion. The US economy is currently in its second longest cyclical upturn since records began in the 1850s. Studies have found that both marginal propensity to consume and the fiscal multiplier are lower in such periods than when stimulus measures are introduced anticyclically.

The repatriation of foreign profits, which also enjoys tax benefits, also remains below expectations and US corporations are primarily using the repatriated capital to repurchase their own shares instead of expanding capacities.

Trump's tax reform: not very effective and at the wrong time(PDF, 272 KB, non-accessible)