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Tax burden distribution and GDP growth: Non-linear causality considerations in the USA

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Listed:
  • Karagianni, Stella
  • Pempetzoglou, Maria
  • Saraidaris, Anastasios

Abstract

The objective of the study is to investigate for non-linear causality running from a set of alternative tax burden ratios — i.e. total tax burden, tax burden on production and imports, tax burden on personal income and, tax burden on corporate income — to per capita GDP growth. The study employs tax revenues and GDP U.S. government data for the period 1948:1–2008:4 in two non-linear causality tests, developed by Hiemstra and Jones (1994) and Diks and Panchenko (2006). Using the two alternative tests serves the need for evaluating the role of heteroskedasticity as a non-linear causality-affecting factor. In a fiscal policy framework, the study explores the GDP growth influential role of the tax burden distribution across tax-liable groups in a country's economy. The empirical findings provide two discrete policy considerations. First, when the policy challenge is to influence the GDP growth by means of taxation, this should be preferably attempted by adjusting the taxes levied on production and imports or, on corporate income. On the contrary, when stability in GDP growth is required, while a change in the tax policy is attempted, this should be preferably restricted in the field of the personal income taxation.

Suggested Citation

  • Karagianni, Stella & Pempetzoglou, Maria & Saraidaris, Anastasios, 2012. "Tax burden distribution and GDP growth: Non-linear causality considerations in the USA," International Review of Economics & Finance, Elsevier, vol. 21(1), pages 186-194.
  • Handle: RePEc:eee:reveco:v:21:y:2012:i:1:p:186-194
    DOI: 10.1016/j.iref.2011.06.002
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Bosupeng, Mpho, 2015. "The Impossible Trinity and Financial Markets – An Examination of Inflation Volatility Spillovers," MPRA Paper 77923, University Library of Munich, Germany, revised 2015.
    2. Maria Pempetzoglou, 2014. "Electricity Consumption and Economic Growth: A Linear and Nonlinear Causality Investigation for Turkey," International Journal of Energy Economics and Policy, Econjournals, vol. 4(2), pages 263-273.
    3. Lee, Chien-Chiang & Chiu, Yi-Bin, 2013. "Modeling OECD energy demand: An international panel smooth transition error-correction model," International Review of Economics & Finance, Elsevier, vol. 25(C), pages 372-383.
    4. Mikhail Stolbov, 2014. "How Are Interbank and Sovereign Debt Markets Linked? Evidence from 14 OECD Countries, the Euro Area and Russia," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 61(3), pages 331-348, June.
    5. Shafi, Maryam & Asghar, Zahid, 2015. "Tax Policy and Economic Growth: A Semi-Parametric Approach Using AMT," MPRA Paper 66662, University Library of Munich, Germany.
    6. repec:liu:liucej:v:14:y:2017:i:2:p:265-301 is not listed on IDEAS
    7. Chiu, Yi-Bin & Sun, Chia-Hung D., 2016. "The role of savings rate in exchange rate and trade imbalance nexus: Cross-countries evidence," Economic Modelling, Elsevier, vol. 52(PB), pages 1017-1025.
    8. Lee, Chien-Chiang & Chiu, Yi-Bin, 2012. "The impact of real income on insurance premiums: Evidence from panel data," International Review of Economics & Finance, Elsevier, vol. 21(1), pages 246-260.

    More about this item

    Keywords

    Non-linear causality; GDP growth; Tax burden ratios;

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

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    1. Tax burden distribution and GDP growth: non-linear causality, considerations in the USA (IREF 2012) in ReplicationWiki

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