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The Relationship between Economic Uncertainty and Corporate Tax Rates

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

No 201945, Working Papers from University of Pretoria, Department of Economics

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

Keywords: corporate taxation; economic uncertainty; uncertainty shocks; business cycles; panel data estimation techniques (search for similar items in EconPapers)
JEL-codes: C23 D81 F44 G38 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2019-06
New Economics Papers: this item is included in nep-pub
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