Growth-Enhancing Taxes

David de Padua (), Mae Hyacinth Kiocho () and Donghyun Park
Additional contact information
David de Padua: Asian Development Bank
Mae Hyacinth Kiocho: Asian Development Bank

No 727, ADB Economics Working Paper Series from Asian Development Bank

Abstract: We investigate the conditions under which tax revenues can enhance economic growth. Using a newly constructed dataset consisting of 135 economies and spanning the period 1990–2019, we study how changes in tax revenues impact economic growth using a panel vector autoregression (PVAR) model. Tax revenues have a persistent positive impact on growth, and the association is especially pronounced in emerging economies. Strict inflation targeting, low-inflation, flexible exchange rates, a more developed financial sector, higher investment rates, and strong governance reinforce the growth-enhancing effect of taxes, but these results are conditional on the income level of the economy. Our findings imply that the effect of taxes on growth should be evaluated within macroeconomic and structural constraints.

Keywords: taxes; growth (search for similar items in EconPapers)
JEL-codes: H20 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2024-05-31
New Economics Papers: this item is included in nep-gro, nep-pbe, nep-pub and nep-sea
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.adb.org/publications/growth-enhancing-taxes Full text (text/html)

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:ris:adbewp:0727

Access Statistics for this paper

More papers in ADB Economics Working Paper Series from Asian Development Bank 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines. Contact information at EDIRC.
Bibliographic data for series maintained by Orlee Velarde ().