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Quasi-Experimental Analysis On The Effects Of Adoption Of A Value Added Tax

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  • ALEX UFIER

Abstract

type="main" xml:id="ecin12099-abs-0001"> Value added taxes (VATs) have become an important source of government funding in past decades, but little empirical work has been carried out on their macroeconomic impacts. As the decision to implement a VAT is endogenous, regression methods analyzing the impact of the policy choice will yield biased estimates. To solve this problem, I first model the VAT adoption decision for 192 countries using survival analysis. I then match adopters to non-adopters using propensity score matching. I find that VAT adoption is associated with an increase in growth and investment as well as lower inflation and government spending as a share of GDP. (JEL H20, H21)

Suggested Citation

  • Alex Ufier, 2014. "Quasi-Experimental Analysis On The Effects Of Adoption Of A Value Added Tax," Economic Inquiry, Western Economic Association International, vol. 52(4), pages 1364-1379, October.
    • Handle: RePEc:bla:ecinqu:v:52:y:2014:i:4:p:1364-1379
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    File URL: http://hdl.handle.net/10.1111/ecin.2014.52.issue-4
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    Citations

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    Cited by:

    1. Mr. Adrian Peralta & Ms. Marina Mendes Tavares & Xuan S. Tam & Xin Tang, 2018. "The Macroeconomic and Distributional Implications of Fiscal Consolidations in Low-income Countries," IMF Working Papers 2018/146, International Monetary Fund.
    2. Bibek Adhikari, 2015. "When Does Introducing a Value-Added Tax Increase Economic Efficiency? Evidence from the Synthetic Control Method," Working Papers 1524, Tulane University, Department of Economics, revised Nov 2015.
    3. Kaisa Alavuotunki & Jukka Pirttilä, 2015. "The consequences of the value-added tax on inequality," WIDER Working Paper Series wp-2015-111, World Institute for Development Economic Research (UNU-WIDER).
    4. Anagha Ann Gopakumar & Avneet Kaur & Vikash Ramiah & Krishna Reddy, 2022. "The Sectoral Effects of Value-Added Tax: Evidence from UAE Stock Markets," JRFM, MDPI, vol. 15(10), pages 1-16, September.
    5. Xi Wei & Nie Yingqin & Cheng Xiran, 2019. "Indirect Tax Burden of Regional Residents: Study on Long Term MRIO Model," Journal of Systems Science and Information, De Gruyter, vol. 7(6), pages 568-583, December.
    6. Harsha Konara Mudiyanselage & Shawn Xiaoguang Chen, 2022. "What impairs the ‘money machine’ of VAT in developing countries?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(5), pages 1128-1159, October.
    7. Santiago Acosta-Ormaechea & Atsuyoshi Morozumi, 2021. "The value-added tax and growth: design matters," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(5), pages 1211-1241, October.
    8. Renyan Mu & Nigatu Mengesha Fentaw & Lu Zhang, 2022. "The Impacts of Value-Added Tax Audit on Tax Revenue Performance: The Mediating Role of Electronics Tax System, Evidence from the Amhara Region, Ethiopia," Sustainability, MDPI, vol. 14(10), pages 1-22, May.
    9. Tommaso Giommoni & Gabriel Loumeau, 2022. "Taxation with a Grain of Salt: The Long-Term Effect of Fiscal Policy on Local Development," CESifo Working Paper Series 9997, CESifo.
    10. Adandohoin, Kodjo, 2018. "Tax transition in developing countries: Do VAT and excises really work?," MPRA Paper 91522, University Library of Munich, Germany.
    11. Kodjo Adandohoin, 2021. "Tax transition in developing countries: do value added tax and excises really work?," International Economics and Economic Policy, Springer, vol. 18(2), pages 379-424, May.
    12. Kaisa Alavuotunki & Jukka Pirttilä, 2015. "The consequences of the value-added tax on inequality," WIDER Working Paper Series 111, World Institute for Development Economic Research (UNU-WIDER).
    13. Alex Ufier, 2017. "The effect of VATs on government balance sheets," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(6), pages 1141-1173, December.
    14. Christou Anna & Eriotis Nikolaos & Lomis Ioannis & Papadakis Spyros & Thalassinos Eleftherios, 2021. "The Greek VAT Gap: The Influence of Individual Economic Sectors," European Research Studies Journal, European Research Studies Journal, vol. 0(4B), pages 851-882.

    More about this item

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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