Macroeconomic Consequences of Taxation in the 80s
During the 1980s the OECD countries experienced divergent trends in taxation. In some countries governments took to cutting tax rates, especially income tax rates, influenced perhaps by the supply-side economists. In other countries, tax rates continued to rise as had generally been the case through the 1970s. In this paper we investigate the effects of this divergence on macroeconomic performance, measured various ways, across countries. From a conventional, neo-classical, open economy setting, we generate a number of predictions for the consequences of tax rate changes, which we subsequently investigate empirically. We find robust and important effects suggesting that a large proportion of the divergence of economic performance through the 1980s can be explained by the supply side effects of tax policy. We subsequently investigate why tax policy diverged, and find that the state of public finances at the beginning of the decade, as well as changes in the political persuasion of government were both important influences on the direction of taxation policy.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||Feb 1993|
|Date of revision:|
|Contact details of provider:|| Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP|
When requesting a correction, please mention this item's handle: RePEc:cep:cepdps:dp0121. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.