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Tax policy and economic growth: does it really matter?

Donatella Baiardi (), Paola Profeta (), Riccardo Puglisi and Simona Scabrosetti ()
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Donatella Baiardi: University of Parma
Paola Profeta: Bocconi University
Simona Scabrosetti: DONDENA Centre, Bocconi University

International Tax and Public Finance, 2019, vol. 26, issue 2, 282-316

Abstract: Abstract We study the relationship between per capita GDP, overall tax revenue and tax composition. We find that there is some evidence of a negative and statistically significant relationship between tax revenue and economic growth, while there are no robust relationships between revenue-neutral tax shifts and economic growth. The results hold in different samples of OECD countries for different time periods. We also identify different relationships between the short run and long run. Overall, our results cast doubts on the potential growth enhancing effects of a shift from direct to indirect taxation, with paramount consequences on tax policy.

Keywords: Economic growth; Taxation; Tax mix; OECD countries (search for similar items in EconPapers)
JEL-codes: E62 H20 P50 (search for similar items in EconPapers)
Date: 2019
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Working Paper: Tax Policy and Economic Growth: Does It Really Matter? (2017) Downloads
Working Paper: Tax Policy and Economic Growth: Does It Really Matter? (2017) Downloads
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Handle: RePEc:kap:itaxpf:v:26:y:2019:i:2:d:10.1007_s10797-018-9494-3