How Buoyant is the Tax System? New Evidence from a Large Heterogeneous Panel

Paolo Dudine and Joao Jalles

No 2017/004, IMF Working Papers from International Monetary Fund

Abstract: In this paper we provide short- and long-run tax buoyancy estimates for 107 countries (distributed between advanced, emerging and low-income) for the period 1980–2014. By means of Fully-Modified OLS and (Pooled) Mean Group estimators, we find that: i) for advanced economies both long-run and short-run buoyancies are not different from one; ii) long run tax buoyancy exceeds one in the case of CIT for advanced economies, PIT and SSC in emerging markets, and TGS for low income countries, iii) in advanced countries (emerging market economies) CIT (CIT and TGS) buoyancy is larger during contractions than during times of economic expansions; iv) both trade openness and human capital increase buoyancy while inflation and output volatility decrease it.

Keywords: WP; tax buoyancy; tax revenue; buoyancy estimate; buoyancies help; tax elasticity; recession; error correction model; pooled mean group; short vs long run; fiscal sustainability; buoyancy coefficient; tax category; Corporate income tax; Personal income tax; Inflation; Emerging and frontier financial markets; Global (search for similar items in EconPapers)
Pages: 33
Date: 2017-01-19
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Citations: View citations in EconPapers (16)

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Journal Article: How Buoyant Is the Tax System? New Evidence from a Large Heterogeneous Panel (2018)
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