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A revisit on the tax burden distribution and GDP growth: fresh evidence using a consistent nonparametric test for causality for the USA

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  • Aviral Tiwari

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  • Mihai Mutascu

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Abstract

We revisited the evidence of Karagianni et al. (Int Rev Econ Fin 21:186–194, 2012 ) and Tiwari (Econ Bull 32:147–159, 2012 ) by employing a recently developed and more powerful nonlinear Granger-causality test proposed by Nishiyama et al. (J Econ 165:112–127, 2011 ) to investigate the existence of Granger-causality from a set of alternative tax burden (ratios) to GDP (per capita GDP), for the period 1947:q1–2009:q3 for the United States of America (USA). The nonlinear Granger-causality test provides strong evidence that personal current taxes and taxes on production and imports Granger-cause GDP and weak evidence that CR Granger-cause GDP. As a consequence, in order to influence (rebalance) the USA’s GDP through taxation, it is recommended to the USA government to adjust the tax structure, focusing on PCT and taxes on production and imports’ shocks. In this case, the tax policy is oriented especially on labour supply and investments. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • Aviral Tiwari & Mihai Mutascu, 2014. "A revisit on the tax burden distribution and GDP growth: fresh evidence using a consistent nonparametric test for causality for the USA," Empirical Economics, Springer, vol. 46(3), pages 961-972, May.
  • Handle: RePEc:spr:empeco:v:46:y:2014:i:3:p:961-972
    DOI: 10.1007/s00181-013-0706-5
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    1. repec:liu:liucej:v:14:y:2017:i:2:p:265-301 is not listed on IDEAS

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    Keywords

    Tax burden; GDP growth; Distribution; Nonparametric test causality; C81; H20; O10;

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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