A tale of two taxes: State-dependency of tax policy
Source of Publication
Scottish Journal of Political Economy
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.
fiscal policy, growth, panel smooth transition, tax policy
Arin, Kerim Peren; Gahramanov, Emin; Omay, Tolga; Tang, Xueli; and Ulubasoglu, Mehmet A., "A tale of two taxes: State-dependency of tax policy" (2023). All Works. 5986.
Indexed in Scopus
Open Access Type
Green: A manuscript of this publication is openly available in a repository