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TAXATION, AGGREGATE ACTIVITY and ECONOMIC GROWTH: FURTHER CROSS‐COUNTRY EVIDENCE ON SOME SUPPLY‐SIDE HYPOTHESES
Author(s) -
Garrison Charles B.,
Lee FengYao
Publication year - 1992
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1992.tb01542.x
Subject(s) - economics , sample (material) , demographic economics , monetary economics , econometrics , chromatography , chemistry
This paper investigates the effect of marginal tax rates on the level of economic activity. Data from sixty‐three countries for the period 1970‐84 provide support for Koester and Kormendi's method of estimating marginal tax rates for individual countries. However, their conclusion that increases in marginal tax rates have negative effects on the level of economic activity is not robust when we extend the time period from 1970‐79 to 1970‐84. Further, even for Koester and Kormendi's own data set, the negative relation does not hold when the sample is disaggregated into industrial countries and low‐income countries.