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Igor Kotlán, Zuzana Machova () and Rudolf Macek ()
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Igor Kotlán: Technical University Ostrava Economic Faculty

Management & Marketing, 2013, vol. 8, issue Special-Issue, 191-198

Abstract: The aim of this article is to verify the effect of the effective tax burden and the economic growth on government spending in OECD countries for time period 2005 – 2010. From the methodological point of view, we use VAR model and generalized method of moments. The taxation is approximated by the tax quota (TQ) and the World Tax Index (WTI) - an alternative designed by the authors of the article. Concerning the impact of the economic growth on the government spending we found out that results diverge from the economic theory and this can be attributed to the non-standard fiscal measures in response to the economic crisis. Concerning the impact of the taxation on the share of the government expenditure there exist the significant positive impact on the government spending in the case of use of the TQ. For the WTI, we found out that increasing effective taxation is reflected in declining government spending which can be attributed to legal tax evasion or the crowding out effect associated with declining tax revenues within the meaning of the Laffer curve.

Keywords: economic growth; government spending; tax quota; World Tax Index; VAR model. (search for similar items in EconPapers)
Date: 2013
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Handle: RePEc:eph:journl:v:8:y:2013:i:special-issue:p:191-198