Evaluating the Economic Effects of Flat Tax Reforms Using Synthetic Control Methods
Bibek Adhikari () and
James Alm ()
No 6770, Working Paper Series from Victoria University of Wellington, Chair in Public Finance
Tax reforms are often motivated by their potential to improve economic performance. However,their actual impacts are difficult to quantify. We analyze the impact of flat tax reform on incomes using â€œsynthetic controlâ€ methods. We identify the 8 Eastern and Central European countries that adopted flat tax systems between 1994 and 2005, and then compare post-reform GDP per capita of â€œtreatedâ€ countries with a convex combination of similar but â€œuntreatedâ€ countries, while accounting for the time-varying impact of unobservable heterogeneity. We find positive impacts in all 8 countries, with 7 out of 8 cases significant at the conventional level.
Keywords: Flat tax; Tax reform; Synthetic control methods (search for similar items in EconPapers)
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Journal Article: Evaluating the Economic Effects of Flat Tax Reforms Using Synthetic Control Methods (2016)
Working Paper: Evaluating the Economic Effects of Flat Tax Reforms Using Synthetic Control Methods (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:vuw:vuwcpf:6770
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