【正文】 paid by businesses (the employer). If part of the payroll reduction goes to the worker (the employee), this effect is not captured here and in subsequent analyses. It will clearly have additional beneficial effects, most obviously on the purchasing power of workers, but also on the government budget (as the government won’t have to pay unemployment benefits). In short, the results presented here are a conservative estimate.Table 1: Employment and Growth Effects(1) (2) (3) (4) Employment rate Growth ratePayroll Tax *** ***() ()All Business Taxes *** ***() ()Log GDPpc *** *** *** ***() () () ()Constant *** *** *** ***() () () ()Observations 85 85 84 84Rsquared Standard errors in parentheses* significant at 10%。t have money say it is running a budget deficit? Then the ability to spend yourself out of a crisis is limited, unless you borrow internationally. Some countries have already done that. A more problematic case is when the existing government infrastructure projects are considered inefficient and corrupt. Then there is considerably less faith in the ability of government to handle an even bigger burden of projects. Even in the absence of corruption, fiscal stimulus has recently been shown to have less of an effect on output expansion than tax stimulus. Ramey (2020) and Romer and Romer (2020) both look at the historical evidence of fiscal expansions in the United States, looking at events such as military buildup around the Korean and Vietnam wars, the Cold War fiscal expansion after the Soviet Union invaded Afghanistan, and the more recent 9/11 buildup. These policies are pared with tax stimulus package, for example in the second Reagan term and the first Clinton term. The results show that the multiplier effect of fiscal stimulus is (for each dollar spent output increases by $), while the multiplier effect of a tax stimulus is about 3, twice as large.This paper discusses the benefits of tax reform as a crisisresponse measure. It provides a calculation of the benefits of such reform, focused on the reduction of payroll taxes, using the example of Bulgaria. It also estimates the costs in terms of foregone revenue. Bulgaria is chosen for two reasons. First, the data necessary to calculate the effects of the tax reform were readily available as one of the authors has done previous work in this area. Second, Bulgaria is one of twodozen former transition economies which have yet to reform substantially their payroll tax system.We find that a reform to reduce the payroll tax by percentage points,3 from % to %, would result in 130,000 jobs been created or saved, and a % increase in annual GDP growth. Taking the static and dynamic effects of such reform into account, the cost would amount to % of GDP. This is onesixth of the projected budget surplus for 2020.The reform would encourage employers to keep more workers during the crisis (thus working as an employment policy). It would also put more money in the hands of consumers, thus boosting the economy overall. Such a reform has three additional benefits: it is not subject to corruption: the government is not in a position to distribute largesse. The second benefit is that it works as a direct stimulus every business and worker in the formal economy gets the benefit. Finally, it is quick to implement and can have immediate effects. This is in contrast to a fiscal stimulus 2 See details here 3 A 5 percentage point reduction for employers and a percentage point reduction for employees.2package, which takes time to implement. Some of the needed jobs may take months and even years to materialize.This reform has implications for other countries too. Candidates include Albania, Belarus, Kazakhstan, Azerbaijan, Slovakia, and most other East European economies which have gone through a period of rapid economic growth and now face the prospect of a painful year or two of falling demand. It also applies to many Latin American and Asian countries, which see the demand for their exports dwindle, or the prices of their main mod