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

Nazila Alinaghi () and W. Reed ()

Working Papers in Economics from University of Canterbury, Department of Economics and Finance

Abstract: This study performs a meta-analysis of the effect of taxes on economic growth in 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 (2009) that predicts the growth effects from various tax-spending-deficit combinations. We apply this taxonomy to 979 estimates from 49 studies of tax effects in OECD countries. Our headline result is that a 10% increase in taxes is associated with a decrease in annual GDP growth of approximately -0.2% when bundled as part of a TaxNegative taxspending- deficit combination. The same tax increase is associated with an increase in annual GDP growth of approximately 0.2% when part of a TaxPositive fiscal policy package. All of our data, output, and programming code is publicly available at https://osf.io/6bfgx/.

Keywords: Meta-analysis; Taxes; Economic growth; OECD (search for similar items in EconPapers)
JEL-codes: H2 H5 H6 O47 O50 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2020-07-01
New Economics Papers: this item is included in nep-pbe
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Related works:
Journal Article: Taxes and Economic Growth in OECD Countries: A Meta-analysis (2021) 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:cbt:econwp:20/12

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