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Optimal taxation and budget deficits: Evidence for the EU's New Member States

Author

Listed:
  • Gerhard Reitschuler

    () (Department of Economics, University of Innsbruck)

Abstract

The tax smoothing hypothesis (TSH) is tested for the New Member States of the European Union. Our results show that the TSH holds for five countries, the introduction of the Maastricht 3%-deficit rule, however, had very little effect with regard to the validity of the TSH.

Suggested Citation

  • Gerhard Reitschuler, 2011. "Optimal taxation and budget deficits: Evidence for the EU's New Member States," Economics Bulletin, AccessEcon, vol. 31(3), pages 2593-2602.
  • Handle: RePEc:ebl:ecbull:eb-11-00268
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    File URL: http://www.accessecon.com/Pubs/EB/2011/Volume31/EB-11-V31-I3-P233.pdf
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    References listed on IDEAS

    as
    1. Barro, Robert J, 1979. "On the Determination of the Public Debt," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 940-971, October.
    2. Crosby, M. & Olekalns, N., 1998. "Some Long Run Evidence on Tax Smoothing," Department of Economics - Working Papers Series 609, The University of Melbourne.
    3. Huang, Chao-Hsi & Lin, Kenneth S., 1993. "Deficits, government expenditures, and tax smoothing in the United States: 1929-1988," Journal of Monetary Economics, Elsevier, vol. 31(3), pages 317-339, June.
    4. Campbell, John Y & Shiller, Robert J, 1987. "Cointegration and Tests of Present Value Models," Journal of Political Economy, University of Chicago Press, vol. 95(5), pages 1062-1088, October.
    5. Paul Cashin & Nilss Olekalns & Ratna Sahay, 1998. "Tax Smoothing in a Financially Repressed Economy; Evidence from India," IMF Working Papers 98/122, International Monetary Fund.
    6. International Monetary Fund, 1999. "Spend Now, Pay Later? Tax Smoothing and Fiscal Sustainability in South Asia," IMF Working Papers 99/63, International Monetary Fund.
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    Cited by:

    1. Taner Turan & Mesut Karakas & Halit Yanikkaya, 2014. "Tax Smoothing Hypothesis: A Turkish Case," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 61(4), pages 487-501, September.

    More about this item

    Keywords

    Tax smoothing; Government budget constraint; Fiscal rule; Cointegration;

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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