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A Panel Data Analysis of Taxation in Europe: Social Contributions Matter


  • Morgane Laouenan
  • Thierry Warin


This paper provides an analysis of the taxation structure in Europe, and its possible impact on growth. The assumption is often made that a decrease in taxes will improve growth. The study covers the period 1985-2003, the 12 countries belonging to the euro zone, and details the different categories of taxes across countries. The panel data analysis is based upon an error component model. The only negative relationship between growth and taxes is found when considering the social contributions. In other words, policymakers willing to positively impact their country's growth should concentrate first on the reduction of social contributions.

Suggested Citation

  • Morgane Laouenan & Thierry Warin, 2005. "A Panel Data Analysis of Taxation in Europe: Social Contributions Matter," The IUP Journal of Applied Economics, IUP Publications, vol. 0(4), pages 7-19, July.
  • Handle: RePEc:icf:icfjae:v:04:y:2005:i:4:p:7-19

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    References listed on IDEAS

    1. Hoelscher, Gregory, 1986. "New Evidence on Deficits and Interest Rates," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 18(1), pages 1-17, February.
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    3. Cebula, Richard, 1996. "An Empirical Note on the Impact of the Federal Budget Deficit on Ex Ante Real Long-Term, Interest Rates, 1973-1995," MPRA Paper 51414, University Library of Munich, Germany.
    4. James R. Barth & George Iden & Frank S. Russek, 1984. "Do Federal Deficits Really Matter?," Contemporary Economic Policy, Western Economic Association International, vol. 3(1), pages 79-95, September.
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    7. Cebula, Richard J & Belton, Willie J, 1993. "Government Budget Deficits and Interest Rates in the United States: Evidence for Closed and Open Systems Put into Perspective, 1955-1989," Public Finance = Finances publiques, , vol. 48(2), pages 188-209.
    8. Cebula, Richard J. & Saltz, Ira S., 1998. "Ex Ante Real Long-Term Interest Rates and U.S. Federal Budget Deficits: Preliminary Error-Correction Evidence, 1971-1991," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 51(2), pages 163-169.
    9. Feldstein, Martin S & Eckstein, Otto, 1970. "The Fundamental Determinants of the Interest Rate," The Review of Economics and Statistics, MIT Press, vol. 52(4), pages 363-375, November.
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