How taxes affect growth: evidence from cross-country panel data

Abstract We evaluate the implications of different methodological choices for estimating the effect of tax policy on economic growth using cross-country panel data. We estimate the effect of personal, corporate, and value-added tax rate changes using alternative measures of policy shocks and employing estimation strategies both from the previous literature, and from newer methods that account for staggered treatments. Overall, we find imprecise estimates that do not credibly support claims that tax rate changes have a statistically robust medium-term impact on national income.