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Tax Design in the OECD: A Test of the Hines-Summers Hypothesis

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  • Davide Furceri

    (OECD Economics Department, University of Palermo, 2, Rue André-Pascal, 75775 Paris, France.)

  • Georgios Karras

    (Department of Economics, University of Illinois at Chicago, Chicago, Illinois, USA.)

Abstract

This paper investigates the effects of economic size and trade openness on tax design in the OECD. Using data for 30 OECD countries over the 1965–2007 period, we test the recently proposed Hines-Summers [2009] Hypothesis, according to which the smaller the size and the greater the openness of the economy, the more it will rely on expenditure taxes and the less on income taxes. Our findings show that the Hines-Summers Hypothesis can claim broad, statistically significant, and robust empirical support in the OECD data sets we examined.

Suggested Citation

  • Davide Furceri & Georgios Karras, 2011. "Tax Design in the OECD: A Test of the Hines-Summers Hypothesis," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 37(2), pages 239-247.
    • Handle: RePEc:pal:easeco:v:37:y:2011:i:2:p:239-247
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    More about this item

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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