Szarowska, Irena (2010): Changes in taxation and their impact on economic growth in the European Union. Published in: Acta Universitatis Agriculturae et Silviculturae Mendeleianae Brunensis , Vol. 59, No. 2 (March 2011): pp. 325-332.
Download (137kB) | Preview
The aim of the paper is to analyze changes in taxation and their impact on economic growth in the European Union. The analysis is performed on adjusted annual panel data of 24 European Union countries in a period 1995–2008. Panel regression with fixed effects is used as a basic method of research. The panel regression is based on analysis the effect of total tax quota changes on GDP growth in model 1, of changes in its components (social contribution, direct and indirect tax quotas) in model 2 and of personal and corporate income tax quota changes in model 3. Results of empirical tests verify statistically significant negative effect of tax burden on GDP growth. Total tax quota increased by 1% decreases the GDP growth rate by 0.29% in the same year. Estimations confirm a statistically significant negative effect of direct taxes on GDP growth as well. A cut in the direct tax quota by 1% raises the GDP growth rate by 0.43%. The model also presents a high negative impact of an increase in the corporate income tax quota on GDP growth (a value of the regression coefficient is minus 1.28%) expresses the high negative. The effect of social contribution quota on GDP growth is not statistically significant in any estimation.
|Item Type:||MPRA Paper|
|Original Title:||Changes in taxation and their impact on economic growth in the European Union.|
|English Title:||Changes in taxation and their impact on economic growth in the European Union.|
|Keywords:||taxation; tax burden; economic growth; panel regression|
|Subjects:||E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy
C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H25 - Business Taxes and Subsidies
|Depositing User:||Irena Szarowska|
|Date Deposited:||20. Jul 2011 22:08|
|Last Modified:||05. Jan 2016 20:56|
BARRO, R. J., 1991: Economic growth in a cross-section of countries. Quarterly Journal of Economics, 106. ISSN 0033-5533.
CIPRA, T., 2008: Finanční ekonometrie. Praha: Ekopress. ISBN 9788086929439.
DURBIN, J., WATSON, G. S., 1951: Testing for Serial Correlation in Least Squares Regression. Biometrika, 38, 159–179. ISSN 0006-3444.
DOUGHERTY, CH., 2007: Introduction To Econometrics. Oxford University Press. ISBN 0199280967.
HILL, R., 2008: Optimal taxation and economic growth. Public Choice, 134, 419–427. ISSN 0048-5829.
JOHANSSON, A. et al., 2008: Tax and economic growth. [cit. 2009-04-23]. Cited from http://www.olis.oecd.org/olis/2008doc.nsf/linkto/eco-wkp(2008)28.
KARRAS, G., FURCERI, D., 2009: Taxes and growth in Europe. South-Eastern Europe Journal of Economics, 2, 181–204. ISSN 1109-8597.
KING, R. G., Rebelo, S., 1990: Public policy and economic growth: developing neoclassical implications. Journal of Political Economy, 98, issue 5, 126–150. ISSN 0022-3808.
LEE, Y., GORDON, R. H., 2005: Tax Structure and Economic Growth. Journal of Public Economics, 89, 1027–1043. ISSN 0047-2727.
LEIBFRITZ, W., THORNTON, J., BIBBEE, A., 1997: Taxation and Economic Performance. [cit. 2010-12-03]. Cited from http://www.scribd.com/doc/35768811/% E2%80%9CTaxation-and-Economic-Performance%E2%80%9D-Leibfritz-W-J-thornton-and-A-Bibbee-1997.
PLOJHAR, M., TOMŠÍK, V., 2004: Daně a ekonomická výkonnost. [cit. 2009-04-23]. Cited from http://www.newton.cz/redsys/docs/analyzy/makroanalyzy/87954a74714778a c0366ace018f3e251.pdf.
PLOSSER, C. I., 1992: The search for growth. In Proceedings, Federal Reserve Bank of Kansas City, pp 57–92.
ROMERO-ÁVILA, D., STRAUCH, R., 2008: Public finances and long-term growth in Europe: Evidence from a panel data analysis. European Journal of Political Economy, 24, 172–191. ISSN 0176-2680.
SCULLY, G. W., 1991: Tax rates, Tax Revenues and Economic Growth. [cit. 2010-03-03]. Cited from http://www.ncpa.org/pub/st159.
SCULLY, G. W., 2000: The growth-maximizing tax rate. Pacific Economic Review, 5, 93–96. ISSN 1468-0106.
SLEMROD, J., 1995: Involvement, Prosperity, and Economic Growth? Brookings Papers on Economic Activity, 26, 2, 373–431. ISSN 0007-2303.
SZAROWSKA, I., 2010: The effect of tax burden on economic growth in the European Union. In Proceedings of the 28th International Conference on Mathematical Methods in Economics 2010. České Budějovice: University of South Bohemia, pp. 596–601. ISBN 978-80-7394-218-2.
Taxation trends in the European Union, 2010: Luxembourg: Office for Official Publications of the European Communities. ISBN 9789279158018.
VERBEEK, M., 2000: A guide to modern econometrics. New York: John Wiley & Sons Inc. ISBN 9780470517697.