Examining the Volatility of Ireland’s Tax Base in the Paradigm of Modern Portfolio Theory

Keith Fitzgerald and Jacopo Bedogni
Additional contact information
Keith Fitzgerald: Parliamentary Budget Office, Dublin
Jacopo Bedogni: Parliamentary Budget Office, Dublin

The Economic and Social Review, 2019, vol. 50, issue 3, 429-458

Abstract: This paper extends a theoretical and empirical framework commonly applied in international finance to present an alternative paradigm within which issues of tax revenue volatility in Ireland can be studied. We establish a trade-off between revenue growth and volatility, typically associated with financial asset returns. We observe strong but time-varying cointegration among tax revenue streams. Statistical tests of mean-variance spanning suggest diversification benefits from holding Income Tax and Excise Duty. We establish the minimum variance tax portfolio, and also find that, from a meanvariance optimality perspective, the portfolio consisting of 2017 tax shares is sub-optimal. Practical policy implications are discussed.

Keywords: tax revenue; tax policy; Ireland (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.esr.ie/article/view/1249/234 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eso:journl:v:50:y:2019:i:3:p:429-458

Access Statistics for this article

More articles in The Economic and Social Review from Economic and Social Studies
Bibliographic data for series maintained by Aedin Doris ().