THE RELATIONSHIP BETWEEN ECONOMIC POLICY UNCERTAINTY AND CORPORATE TAX RATES

Matthew Clance, Giray Gözgör, Rangan Gupta and Chi Keung Lau

Annals of Financial Economics (AFE), 2021, vol. 16, issue 01, 1-13

Abstract: This paper investigates the relationship between economic policy uncertainty and corporate tax rates in a panel dataset of 126 countries throughout 2003–2018. We use the so-called “World Uncertainty Index” to measure the level of economic policy uncertainty. We utilize various estimation techniques and find a one-way causality from economic policy uncertainty to corporate tax rates. Specifically, a rise in economic policy uncertainty leads to higher corporate tax rates. We also discuss potential implications.

Keywords: Corporate taxation; economic policy uncertainty; uncertainty shocks; business cycles; panel data estimation techniques (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:wsi:afexxx:v:16:y:2021:i:01:n:s2010495221500020

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DOI: 10.1142/S2010495221500020

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