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A revisit on the tax burden distribution and GDP growth: fresh evidence using a consistent nonparametric test for causality for the USA

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  • Aviral Tiwari
  • Mihai Mutascu

Abstract

We revisited the evidence of Karagianni et al. (Int Rev Econ Fin 21:186–194, 2012 ) and Tiwari (Econ Bull 32:147–159, 2012 ) by employing a recently developed and more powerful nonlinear Granger-causality test proposed by Nishiyama et al. (J Econ 165:112–127, 2011 ) to investigate the existence of Granger-causality from a set of alternative tax burden (ratios) to GDP (per capita GDP), for the period 1947:q1–2009:q3 for the United States of America (USA). The nonlinear Granger-causality test provides strong evidence that personal current taxes and taxes on production and imports Granger-cause GDP and weak evidence that CR Granger-cause GDP. As a consequence, in order to influence (rebalance) the USA’s GDP through taxation, it is recommended to the USA government to adjust the tax structure, focusing on PCT and taxes on production and imports’ shocks. In this case, the tax policy is oriented especially on labour supply and investments. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • Aviral Tiwari & Mihai Mutascu, 2014. "A revisit on the tax burden distribution and GDP growth: fresh evidence using a consistent nonparametric test for causality for the USA," Empirical Economics, Springer, vol. 46(3), pages 961-972, May.
    • Handle: RePEc:spr:empeco:v:46:y:2014:i:3:p:961-972
    DOI: 10.1007/s00181-013-0706-5
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    Cited by:

    1. Sami Saafi & Meriem Bel Haj Mohamed & Abdeljelil Farhat, 2017. "Untangling the causal relationship between tax burden distribution and economic growth in 23 OECD countries: Fresh evidence from linear and non-linear Granger causality," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 14(2), pages 265-301, December.
    2. Cieślukowski Maciej & Mutascu Mihai, 2018. "Fiscal consequences of the abolition of sugar levies," Economics and Business Review, Sciendo, vol. 4(4), pages 83-96, November.
    3. Angeliki Papana & Catherine Kyrtsou & Dimitris Kugiumtzis & Cees Diks, 2023. "Identification of causal relationships in non-stationary time series with an information measure: Evidence for simulated and financial data," Empirical Economics, Springer, vol. 64(3), pages 1399-1420, March.
    4. Cătălina MOTOFEI, 2020. "Analysis of the correlation between taxation indicators and economic growth at the macroeconomic level in European Union and Romania," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(625), W), pages 43-54, Winter.

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    More about this item

    Keywords

    Tax burden; GDP growth; Distribution; Nonparametric test causality; C81; H20; O10;
    All these keywords.

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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