Working Paper: CEPR ID: DP6288
Authors: David Meenagh; Patrick Minford; Jiang Wang
Abstract: The effect of business tax and regulation on growth, together with potential effects of government spending on education and R&D, is embodied in a model of a small open economy with growth choices. The structural model is estimated on post-war panel data for 76 countries and the bootstrap is used to produce the model's sampling variation for the analysis of panel regressions of growth. Statistical rejection can occur at either the structural or the growth regression stage. The models featuring government spending on education and R&D are rejected while that with business taxation is accepted.
Keywords: Bootstrap; Testing; Business Regulation; Business Taxation; Government R&D; Growth; Living Standards; Public Education; Structural Model
JEL Codes: C52; O41; O57
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| business taxation (H25) | growth (O40) |
| general tax rate (H29) | growth (O40) |
| government spending on education and R&D (H52) | growth (O40) |