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Taxes and Economic Growth in OECD Countries: A Meta-analysis

Nazila Alinaghi () and W. Reed ()

Public Finance Review, 2021, vol. 49, issue 1, 3-40

Abstract: This study performs a meta-analysis of the effect of taxes on economic growth in Organization for Economic Cooperation and Development (OECD) countries. A challenge with synthesizing tax estimates is that they measure different things. This follows because studies differ in the government budget constraints implied by their regression specifications. To address this problem, we use a taxonomy from Gemmell, Kneller, and Sanz that predicts the growth effects from various tax-spending-deficit combinations. We apply this taxonomy to 979 estimates from forty-nine studies of tax effects in OECD countries. Our headline result is that a 10 percent increase in taxes is associated with a decrease in annual gross domestic product (GDP) growth of approximately −0.2 percent when bundled as part of a TaxNegative tax-spending-deficit combination. The same tax increase is associated with an increase in annual GDP growth of approximately 0.2 percent when part of a TaxPositive fiscal policy package. All of our data, output, and programming code are publicly available at https://osf.io/ 6 bfgx/ .

Keywords: meta-analysis; taxes; economic growth; OECD (search for similar items in EconPapers)
Date: 2021
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https://journals.sagepub.com/doi/10.1177/1091142120961775 (text/html)

Related works:
Working Paper: Taxes and Economic Growth in OECD Countries: A Meta-Analysis (2020) Downloads
Working Paper: Taxes and Economic Growth in OECD Countries: A Meta-Analysis (2020) Downloads
Working Paper: Taxes and Economic Growth in OECD Countries: A Meta-Analysis (2018) Downloads
Working Paper: Taxes and Economic Growth in OECD Countries: A Meta-Analysis (2016) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:49:y:2021:i:1:p:3-40

DOI: 10.1177/1091142120961775

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