The Relationship Between Corporate Tax Rate and Economic Growth During the Global Financial Crisis: Evidence from a Panel VAR

  • Gamze Öz Yalaman Eskisehir Osmangazi University, Eskisehir, Turkey
Keywords: corporate tax, OECD countries, panel VAR

Abstract

This paper compares dynamic relationship between economic growth and corporate tax rate during the recent financial crisis and the non–crisis period using a panel VAR for 29 OECD countries over the period 1998-2016. The results show that corporate tax rate has a significantly negative effect on economic growth. Moreover, the recent financial crisis has had a significant effect on the endogenous interaction between corporate tax rate and economic growth. According to Granger causality test, there is only one-way causality from corporate tax rate to economic growth during the non-crisis period. Interestingly, there are not any causal relationships between corporate tax rate and economic growth during the crisis period. The results show that the recent crisis has had a significant effect on the endogenous interaction between corporate tax rate and economic growth.

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Published
2019-12-17
How to Cite
Öz Yalaman, G. (2019). The Relationship Between Corporate Tax Rate and Economic Growth During the Global Financial Crisis: Evidence from a Panel VAR. European Journal of Government and Economics, 8(2), 189-202. https://doi.org/10.17979/ejge.2019.8.2.5074
Section
Articles