A tale of two taxes: State-dependency of tax policy

Document Type

Article

Source of Publication

Scottish Journal of Political Economy

Publication Date

1-1-2023

Abstract

In this paper, we build a simple endogenous growth model with labour and corporate taxes to investigate the asymmetric effects of tax policy over the growth trajectory. We employ a newly developed panel smooth transition model to empirically analyse a sample of 19 advanced economies over the 1961–2017 period. We find that both the asymmetric effects and the tax measures used are essential. We also find that the effects of corporate and personal taxes on long-run growth are non-linear, while the detrimental effects of personal taxes are empirically larger compared to those of corporate taxes once non-linearities are controlled for.

ISSN

0036-9292

Publisher

Wiley

Disciplines

Business

Keywords

fiscal policy, growth, panel smooth transition, tax policy

Scopus ID

85166414722

Indexed in Scopus

yes

Open Access

yes

Open Access Type

Green: A manuscript of this publication is openly available in a repository

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