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The Relationship Between Economic Policy Uncertainty And Corporate Tax Rates

Author

Listed:
  • MATTHEW CLANCE

    (University of Pretoria, South Africa)

  • GIRAY GOZGOR

    (#x2020;Istanbul Medeniyet University, Turkey)

  • RANGAN GUPTA

    (University of Pretoria, South Africa)

  • CHI KEUNG MARCO LAU

    (#x2021;Teesside University, UK)

Abstract

This paper investigates the relationship between economic policy uncertainty and corporate tax rates in a panel dataset of 126 countries throughout 2003–2018. We use the so-called “World Uncertainty Index” to measure the level of economic policy uncertainty. We utilize various estimation techniques and find a one-way causality from economic policy uncertainty to corporate tax rates. Specifically, a rise in economic policy uncertainty leads to higher corporate tax rates. We also discuss potential implications.

Suggested Citation

  • Matthew Clance & Giray Gozgor & Rangan Gupta & Chi Keung Marco Lau, 2021. "The Relationship Between Economic Policy Uncertainty And Corporate Tax Rates," Annals of Financial Economics (AFE), World Scientific Publishing Co. Pte. Ltd., vol. 16(01), pages 1-13, March.
    • Handle: RePEc:wsi:afexxx:v:16:y:2021:i:01:n:s2010495221500020
    DOI: 10.1142/S2010495221500020
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    Cited by:

    1. Dong, Dayong & Yang, Mo & Yang, Gaoju & Chen, Chang-Chih & Zhang, Xinyi, 2022. "Talk less and do more: Expected strategic adjustments vs. actual changes in the Chinese firms," Pacific-Basin Finance Journal, Elsevier, vol. 75(C).
    2. Ren, Xiaohang & Xia, Xixia & Taghizadeh-Hesary, Farhad, 2023. "Uncertainty of uncertainty and corporate green innovation—Evidence from China," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 634-647.

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