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Tax structure and growth: How robust is the empirical evidence?

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  • Xing, Jing

Abstract

This paper examines the link between the composition of tax revenues and the level of income per capita in the long run. I find that the “tax and growth ranking” suggested by some recent empirical studies is not robust under different assumptions about heterogeneity across countries of the long-run and short-run coefficients in the underlying econometric model. Evidence for significant tax structure effects depends on long-run parameter homogeneity restrictions, underlying pooled mean group estimation, which are found to be invalid.

Suggested Citation

  • Xing, Jing, 2012. "Tax structure and growth: How robust is the empirical evidence?," Economics Letters, Elsevier, vol. 117(1), pages 379-382.
    • Handle: RePEc:eee:ecolet:v:117:y:2012:i:1:p:379-382
    DOI: 10.1016/j.econlet.2012.05.054
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    References listed on IDEAS

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    1. Widmalm, Frida, 2001. "Tax Structure and Growth: Are Some Taxes Better Than Others?," Public Choice, Springer, vol. 107(3-4), pages 199-219, June.
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    5. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
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    More about this item

    Keywords

    Tax structure; Income per capita; Pooled mean group estimator;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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    1. Tax structure and growth: How robust is the empirical evidence? (EL 2012) in ReplicationWiki

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