 Tax buoyancy in OECD countries: New empirical evidenceRaffaele Lagravinese, Paolo Liberati and Agnese Sacchi Journal of Macroeconomics, 2020, vol. 63, issue C Abstract: A renewed interest in the link between business cycle and tax revenues has recently emerged, especially during economic crises. In this paper, we provide an empirical analysis on 35 OECD countries over the period 1995–2016 to estimate both short-run and long-run tax buoyancies, taking into account the macroeconomic framework, changes in governments’ tax policies, budgetary and political variables possibly affecting how taxes react to GDP fluctuations. By adopting the dynamic common correlated effects estimator, we find that both short- and long-run tax responses are lower than those reported in previous cross-country studies. We suggest that this slightly lower than expected reaction of tax revenue can be interpreted as a reduced power of both automatic stabilization in the short-run and fiscal sustainability in the long-run. Results are robust to possible endogeneity issues between tax revenues and business cycles. Keywords: Tax buoyancy; Fiscal stabilization; Business cycle; Macroeconomic conditions; Economic crises; DCCE estimator (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:63:y:2020:i:c:s0164070419302836 DOI: 10.1016/j.jmacro.2020.103189 Access Statistics for this article Journal of Macroeconomics is currently edited by Douglas McMillin and Theodore Palivos More articles in Journal of Macroeconomics from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.