Economics at your fingertips  

Analyzing Tax Policy and Economic Growth by Using Semi-Parametric Approach

Mariuam Shafi (), Zahid Asghar () and Saqlain Raza ()
Additional contact information
Mariuam Shafi: Department of Economics, Lahore College of Women University, Lahore, Pakistan.
Saqlain Raza: COMSATS Institute of Information Technology, Islamabad, Pakistan.

Journal of Economic and Social Thought, 2016, vol. 3, issue 4, 521-533

Abstract: Due to complexities in measuring the impact of tax policy on economic growth, there is need to explore functional relationship between response and predictors. Semi-parametric approaches are often very handy in modeling relationships which are non-linear but cant be completely described either through parametric or non-parametric approaches. To determine the effects of tax policy on economic growthfunctional, cubic smoothing spline method is used along with cross validation test to control the smoothing parameter. To replace the functional form of smoothing coefficients into linear mixed model, maximum likelihood estimation is used. Results indicate that proposed methodology is robust in determining functional form and in achieving increasing average marginal tax rates has negative impact on economic growth results. Empirical results indicate that high AMTRs and population growth rate reduce the performance of economic growth in the developing countries. A reduction on dependence of AMTRs in South Asian countries is needed.

Keywords: Spline smoothing method; Semi-parametric; Tax structure; Economic growth; Average marginal tax rate. (search for similar items in EconPapers)
JEL-codes: C14 H26 H71 O40 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) (application/pdf) (text/html)

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:

Access Statistics for this article

Journal of Economic and Social Thought is currently edited by Bilal KARGI

More articles in Journal of Economic and Social Thought from KSP Journals Istanbul, Turkey.
Bibliographic data for series maintained by Bilal KARGI ().

Page updated 2023-11-11
Handle: RePEc:ksp:journ3:v:3:y:2016:i:4:p:521-533