In:
Macroeconomic Dynamics, Cambridge University Press (CUP), Vol. 27, No. 5 ( 2023-07), p. 1289-1318
Abstract:
We study the effects of taxation on the growth rate of the real per capita GDP in a sample of 21 OECD countries, over the period 1965–2010. To do this, we estimate a version of the model proposed by Mankiw, Romer and Weil [(1992) Quarterly Journal of Economics 107, 407–437.] augmented to consider both direct and indirect effects of taxation on investment share parameters. We employ a semi-parametric technique—namely, a Finite Mixture Model—which combines features from mixed effect models for panel data and cluster analysis methods to account for country-specific unobserved heterogeneity. Our results suggest that taxes have a negative impact on growth: in the baseline model, the coefficient estimates indicate that a 10% cut in personal income tax rate (respectively corporate income tax rate) may raise the GDP growth rate by 0.6% (respectively 0.3%).
Type of Medium:
Online Resource
ISSN:
1365-1005
,
1469-8056
DOI:
10.1017/S1365100522000219
Language:
English
Publisher:
Cambridge University Press (CUP)
Publication Date:
2023
detail.hit.zdb_id:
1501533-6
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