EconPapers    
Economics at your fingertips  
 

Tax Structure and Economic Growth: A Panel Cointegrated VAR Analysis

Silvestro Di Sanzo, Mariano Bella () and Giovanni Graziano ()
Additional contact information
Mariano Bella: Confcommercio Research Department
Giovanni Graziano: Confcommercio Research Department

Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, 2017, vol. 3, issue 2, 239-253

Abstract: Abstract The paper is aimed to re-evaluate the relationship between tax structure and economic growth relying on linear and non-linear panel cointegrated VAR models. The asymmetric impact of tax changes on growth is estimated adapting the threshold cointegration methodology proposed by Hansen and Byeongseon (J Econom 110:293–318, 2002) to the panel framework. The tests indicate that the weak exogeneity and linearity hypotheses are not supported by data. Thus, the empirical results obtained by previous literature in a linear single-equation framework must be interpreted with caution. We find that recurrent taxes on immovable property seem to be the least harmful for the growth, while we do not found compelling evidence favouring consumption taxes over income taxes. Therefore, our results do not fully support the policy prescriptions proposed by many international organizations aimed at shifting the tax burden from income to consumption and property. Moreover, these findings are robust and significant when the tax burden is above the threshold value of around 30%, which is the case for the tax revenue to GDP ratio for the most of European countries in the sample. Policy conclusions are also discussed.

Keywords: Tax structure; Long-run growth; Fiscal policy; Non-linear panel VAR; Error correction model; OECD (search for similar items in EconPapers)
JEL-codes: C3 C5 E6 H3 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://link.springer.com/10.1007/s40797-017-0056-0 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:italej:v:3:y:2017:i:2:d:10.1007_s40797-017-0056-0

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/40797

Access Statistics for this article

Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti is currently edited by Roberto Cellini

More articles in Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti from Springer, Società Italiana degli Economisti (Italian Economic Association) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla ().

 
Page updated 2020-01-17
Handle: RePEc:spr:italej:v:3:y:2017:i:2:d:10.1007_s40797-017-0056-0