International evidence of tax smoothing in a panel of industrial countries
A panel of industrial countries is examined for evidence of 'tax smoothing'. Tax smoothing results when governments minimize tax distortions over time. The model provides a positive theory of government debt and is due primarily to Barro. Unit root tests are performed in panel data to test the null hypothesis of nonstationary tax rates. Panel regressions are then undertaken to test the null hypothesis that tax rate changes are unpredictable and test for evidence of an alternative hypothesis. Political and economic variables are examined for their ability to predict tax rate changes. Overall, the results cannot reject the null hypotheses and support tax smoothing by national governments.
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Volume (Year): 34 (2002)
Issue (Month): 18 ()
Pages: 2325-2331
| Handle: | RePEc:taf:applec:v:34:y:2002:i:18:p:2325-2331 |
| Contact details of provider: | Web page: http://www.tandfonline.com/RAEC20
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References listed on IDEAS
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- Barro, Robert J., 1979.
"On the Determination of the Public Debt,"
Scholarly Articles
3451400, Harvard University Department of Economics.
- Barro, Robert J, 1979. "On the Determination of the Public Debt," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 940-71, October.
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Working Papers in Applied Economic Theory
87-11, Federal Reserve Bank of San Francisco.
- Trehan, Bharat & Walsh, Carl E., 1988. "Common trends, the government's budget constraint, and revenue smoothing," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 425-444.
- Robert J. Barro, 1981. "On the Predictability of Tax-Rate Changes," NBER Working Papers 0636, National Bureau of Economic Research, Inc.
- Perron, Pierre, 1989.
"The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis,"
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- Perron, P, 1988. "The Great Crash, The Oil Price Shock And The Unit Root Hypothesis," Papers 338, Princeton, Department of Economics - Econometric Research Program.
- Strazicich, Mark C., 1997. "Does Tax Smoothing Differ by the Level of Government? Time Series Evidence from Canada and the United States," Journal of Macroeconomics, Elsevier, vol. 19(2), pages 305-326, April.
- Benjamin, Daniel K & Kochin, Levis A, 1982. "A Proposition on Windfalls and Taxes When Some but Not All Resources Are Mobile," Economic Inquiry, Western Economic Association International, vol. 20(3), pages 393-404, July.
- 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.
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