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 |
| DOI: | 10.1080/00036840210143107 |
| Contact details of provider: | Web page: http://www.tandfonline.com/RAEC20
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| Order Information: | Web: http://www.tandfonline.com/pricing/journal/RAEC20 |
References listed on IDEAS
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- Roubini, Nouriel & Sachs, Jeffrey D., 1989. "Political and economic determinants of budget deficits in the industrial democracies," European Economic Review, Elsevier, vol. 33(5), pages 903-933, May.
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- 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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- Bharat Trehan & Carl E. Walsh, 1987. "Common trends, the government's budget constraint, and revenue smoothing," Working Papers in Applied Economic Theory 87-11, Federal Reserve Bank of San Francisco.
- Robert J. Barro, 1981. "On the Predictability of Tax-Rate Changes," NBER Working Papers 0636, National Bureau of Economic Research, Inc.
- Kochin, Levis A. & Benjamin, Daniel K. & Meador, Mark, 1985. "The observational equivalence of rational and irrational consumers if taxation is efficient," Proceedings, Federal Reserve Bank of San Francisco, issue 7, pages 103-125.
- 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.
- Sahasakul, Chaipat, 1986. "The U.S. evidence on optimal taxation over time," Journal of Monetary Economics, Elsevier, vol. 18(3), pages 251-275, November. Full references (including those not matched with items on IDEAS)
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