scholarly journals Examining the relationship between income inequality, taxation and economic freedom: a panel cointegration approach

2020 ◽  
Vol 9 (3) ◽  
pp. 206-215
Author(s):  
Achillefs Karakotsios ◽  
Constantinos Katrakilidis ◽  
Dimitrios Dimitriadis ◽  
Theodoros Christoforidis
Keyword(s):  
Income Inequality ◽  
Economic Freedom ◽  
Causal Effect ◽  
Estimation Method ◽  
Panel Cointegration ◽  
Factors Affecting ◽  
Pooled Mean Group ◽  
Long Run ◽  
Important Challenge ◽  
Negative Impacts

Income inequality has become an important challenge for both developed and developing countries. Taxation and economic freedom are considered as important factors affecting income inequality. This paper aims at the empirical investigation of the causal relationships between income inequality, taxation and economic freedom by applying panel cointegration techniques and Pooled Mean Group (PMG) estimation method on a panel of 58 countries, over the period 1995–2016. The empirical evidence supports a bidirectional long-run causal effect between taxes-to-GDP ratio and income inequality with tax-to-GDP ratio to cause negative impacts on income inequality and thus revealing the redistributive role of taxes. Furthermore, we find a positive effect from economic freedom on income inequality, suggesting a trade-off between economic freedom and income equality.

scholarly journals Economic freedom and growth: A panel cointegration approach

2016 ◽  
Vol 63 (5) ◽  
pp. 541-562 ◽  
Author(s):  
Bernur Acikgoz ◽  
Anthony Amoah ◽  
Mine Yilmazer
Keyword(s):  
Economic Growth ◽  
Panel Data ◽  
Economic Freedom ◽  
Panel Cointegration ◽  
Government Regulations ◽  
Policy Makers ◽  
Country Group ◽  
Long Run ◽  
Growth Prospects

This study uses three-country group panel data from 1993 to 2011 in examining the long-run effect of tax burdens (Fiscal index) and government regulations of business (Business index) on economic growth. The outcome of the panel cointegration approach suggests that the variables have a long-run relationship with economic growth. The study finds all the signs of the variables used to be consistent with theoretical expectations. Regarding the variables of interest, it is also found that the Fiscal index has a positive and significant effect on economic growth for all three-country groups. In addition, the Business index has a positive and significant effect for only two-country groups. The study finds that tax burdens and government regulations play an important role on economic growth for most countries in the sample. To harness economic growth prospects, the study offers recommendations for policy makers to consider.

scholarly journals The Differential Impact of Financial Intermediation on Economic Growth in Oil-Dependent Economies

2018 ◽  
Vol 10 (3) ◽  
pp. 267-284
Author(s):  
Anthony Anyanwu ◽  
Christopher Gan ◽  
Baiding Hu
Keyword(s):  
Economic Growth ◽  
Panel Cointegration ◽  
Bank Credit ◽  
Gdp Per Capita ◽  
Differential Impact ◽  
Pooled Mean Group ◽  
Long Run ◽  
Panel Cointegration Test ◽  
Per Capita ◽  
The Relationship

This paper analyses the relationship between bank credit and economic growth. We extend existing literature by treating separately the oil and non-oil sectors of 28 oil-dependent economies from 1990-2012. We employ panel cointegration and pooled mean group estimation techniques which are appropriate for drawing conclusions from dynamic heterogenous panels. The results of the panel cointegration test indicate that bank credit has no significant long-run relationship with non-oil GDP per capita. The results of the pooled mean group estimator reveal no significant long-run impact of bank credit on non-oil GDP per capita. Overall results suggest that banks do not yet provide adequate credit to stimulate non-oil economic growth. The policy implication of our findings is that the financial sector should be more involved in productive investment activities to promote inclusive growth.

A panel vector AutoRegression analysis of income inequality dynamics in each of the 50 states of USA

2017 ◽  
Vol 44 (6) ◽  
pp. 797-815
Author(s):  
Olugbenga Onafowora ◽  
Oluwole Owoye
Keyword(s):  
Income Inequality ◽  
Educational Attainment ◽  
Capita Income ◽  
Economic Freedom ◽  
Vector Autoregression ◽  
Population Ageing ◽  
Content Type ◽  
Long Run ◽  
Per Capita ◽  
Panel Vector Autoregression

Purpose The purpose of this paper is to investigate the income inequality dynamics in each of the 50 states of USA over the period 1981-2011. Design/methodology/approach The paper estimates an augmented Kuznets curve panel Vector AutoRegression in per capita income, economic freedom, educational attainment, unemployment, and population ageing along with evaluating generalized impulse responses functions (GIRF) and generalized forecast-error variance decompositions (GFEVD). Findings All the variables are integrated of order one and are panel cointegrated. Kuznets’ hypothesized inverted U-shaped relationship between inequality and growth is not supported by the data. Unemployment and population ageing have statistically significant positive effects on inequality in the long-run; education has statistically significant negative impact; economic freedom has statistically insignificant positive effect. Long-run bidirectional causality exists among the variables. GFEVD show that excluding income inequality itself, variation in income inequality is more influenced by perturbations in per capita income, educational attainment, and unemployment. GIRF corroborate the results of the GFEVD. Originality/value This paper fulfills an identified need to study the causal relationship between inequality and its determining factors without assuming the a priori exogeneity or endogeneity of the underlying variables.

Are Merchandise Exports and FDI Inflows an Engine of Growth for ASEAN-10 Countries? New Evidence Using the Pooled Mean Group Estimation Method

2018 ◽  
Vol 12 (4) ◽  
pp. 414-430 ◽  
Author(s):  
Soo Khoon Goh ◽  
Koi Nyen Wong ◽  
Chee Lam Yew
Keyword(s):  
Panel Data ◽  
Regional Economy ◽  
Driving Forces ◽  
Early Stage ◽  
Regional Growth ◽  
Estimation Method ◽  
Jel Classification ◽  
Pooled Mean Group ◽  
Long Run ◽  
Short Run

The Association of Southeast Asian Nations (ASEAN) has made remarkable economic progress in terms of rapid economic growth and expanding export trade and foreign direct investment (FDI). Theoretically speaking, both merchandise exports and FDI can be regarded as the key driving forces behind the ‘economic miracle’ of the regional economy. The major contribution of this study is that it is the first effort to empirically analyse the short-run and long-run growth effects of merchandise exports and FDI on the ASEAN-10 countries using time-series panel data. In this regard, this study aims to ascertain whether the spectacular regional growth is export- and FDI-driven, based on the ASEAN-10 panel data spanning from 1970 to 2016 using the pooled mean group (PMG) method. The findings show that merchandise exports are a key source of growth for the regional economy, attributable to the joint liberalisation efforts of the member states to expand trade and FDI. The study does not find evidence of FDI-led growth because the bulk of the FDI was invested in only a few ASEAN countries, and the minor FDI-recipient countries are at an early stage to benefit from the growth impacts of FDI, owing to lower absorptive capacity. JEL Classification: C51, F21, F23, O19

scholarly journals The Impact of Urbanization on Income Inequality: A Study in Vietnam

2019 ◽  
Vol 12 (3) ◽  
pp. 146 ◽  
Author(s):  
Ha ◽  
Le ◽  
Trung-Kien
Keyword(s):  
Income Inequality ◽  
Estimation Method ◽  
School Enrollment ◽  
Regression Estimation ◽  
Short Term ◽  
Enrollment Rate ◽  
Pooled Mean Group ◽  
Impact Of Urbanization ◽  
The Impact

This paper explores the impact of urbanization on income inequality in Vietnam, using the regression estimation method with panel data including Driscoll and Kraay, and Pooled Mean Group. The research data cover 63 provinces in Vietnam from 2006 to 2016. The results show that in the long term, urbanization has an impact on reducing income inequality. In the short term, urbanization has a negligible impact on income inequality. The hypothesis of an inverted-U-shaped relationship between urbanization and income inequality is confirmed. The high school enrollment rate and the proportion of agriculture have an effect on reducing income inequality.

scholarly journals Tax Buoyancy in the Caribbean: Evidence from Heterogenous Panel Cointegration Models

2019 ◽  
Vol 11 (4) ◽  
pp. 36
Author(s):  
Jeetendra Khadan
Keyword(s):  
Global Financial Crisis ◽  
Panel Cointegration ◽  
Property Taxes ◽  
Pooled Mean Group ◽  
Panel Regressions ◽  
Long Run ◽  
Indirect Taxes ◽  
Short Run ◽  
The Mean ◽  
The Caribbean

This paper provides long and short run tax buoyancy estimates for a group of 12 Caribbean countries over the period 1991-2017. By using various panel regressions estimated by the Mean Group and Pooled Mean Group estimators, this paper finds that the long and short run tax buoyancy estimates are statistically greater than one. However, the results vary by tax categories: with respect to indirect taxes—which accounts for almost 65 percent of total tax revenues—the buoyancy of the long run coefficient significantly less than one (0.35), while for direct taxes it is significantly higher than one (1.33). It was also found that long run tax buoyancy was lower in the post global financial crisis period. With respect to short-run buoyancy, corporate taxes and trade taxes are the most buoyant in the short-run while property taxes were found to be statistically insignificant. For taxes on goods on services, the single most important tax for most countries, both long and short run buoyancy is not significantly different from one.

scholarly journals Budget Deficit and Economic Growth in Sub-Saharan Africa: A PMG Approach

2020 ◽  
pp. 1-10
Author(s):  
Gbenga Oladapo Awolaja ◽  
Ikponmwosa Osagie Esefo
Keyword(s):  
Economic Growth ◽  
Significant Relationship ◽  
Budget Deficit ◽  
Estimation Method ◽  
Sub Saharan Africa ◽  
Policy Makers ◽  
Pooled Mean Group ◽  
Long Run ◽  
Short Run ◽  
Sub Saharan

The relationship between budget deficit and economic growth remains one of the widely debated topics among policy makers and economists in both developed and developing countries of the world. This paper empirically investigated the long run and short run relationship between budget deficit and economic growth in sub-Saharan Africa countries from 1991 to 2018 using Panel data for twenty (20) sub-Saharan Africa Countries. The estimation technique employed in the study was the Pooled Mean Group (PMG) estimation method and the regression results revealed that in the long run, budget deficit has a negative and significant relationship with economic growth whereas in the short run, it has a positive and significant relationship with economic growth. The study concluded that government should reduce the overall recurrent expenditure as it will help to mitigate the problem of budget deficit that leads to debt accumulation in sub-Saharan Africa countries and increase expenditure on developmental projects.

scholarly journals Critical Analysis of Governance, Economic Freedom, and Human Capital Implications on Sustainable Economic Growth: Evidence from Sub-Saharan Africa

2021 ◽  
Vol 7 (08) ◽  
Author(s):  
Yusuf Ayotunde Ayodeji
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Causal Relationship ◽  
Economic Freedom ◽  
Sub Saharan Africa ◽  
Pooled Mean Group ◽  
Long Run ◽  
Short Run ◽  
Sub Saharan ◽  
Sustainable Economic Growth

In the recent time, the attention of scholars have shifted towards deeper understanding of factors that drives the achievement of sustainable economic growth, but yet factors such as governance, economic freedom, and human capital have not been exhaustively investigated, especially within the context of Sub-Saharan Africa (SSA). Thus, this study investigates the implications of governance, economic freedom, and human capital on the sustainability of economic growth in the SSA, usingpanel data that spanned between 1996 and 2018, and employed a Pooled Mean Group (PMG) estimator for the analysis. This study found governance, economic, and human capital to have a positive and significant causal relationship with economic growth in the long-run, while only economic freedom was found to have a negative and significant causal relationship with economic growth in the short-run. In addition, this study found that in case of disequilibrium, the model has a convergent speed of adjustment of about 10.8%. The study implications were discussed in the study.

Sign in / Sign up

Export Citation Format

Share Document