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Review of Economic Perspectives

Národohospodárský obzor; The Journal of Masaryk University

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Volume 16, Issue 2


Economic Growth and Budget Constraints: EU Countries Panel Data Analysis

Petr Zimčík
Published Online: 2016-06-28 | DOI: https://doi.org/10.1515/revecp-2016-0007


The aim of this paper is to identify the impacts of different taxes and expenditures on economic growth. The research is focused on 20 selected European Union Member States. These countries are equally divided into four groups based on their average tax burden as presented in the World Tax Index. A comparison of fiscal attributes among these groups is important for the analysis. Annual government finance data from the years 1995 to 2012 are used for an empirical study. The indicators observed are real GDP change, the composition and volume of total government expenditures, tax quotas of individual taxes and total budget balance. These indicators are used within an endogenous growth model together with capital stock and an approximation of human capital. A panel regression with fixed effects is used as an analytic tool. The main results are that an increase in social contributions, property, production and personal income tax quotas has an adverse effect on economic growth.

Keywords : Economic Growth; EU; Taxation; Government Expenditures; Panel Data


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About the article

Received: 2015-07-16

Revised: 2016-06-16

Accepted: 2015-11-26

Published Online: 2016-06-28

Published in Print: 2016-06-01

Citation Information: Review of Economic Perspectives, Volume 16, Issue 2, Pages 87–101, ISSN (Online) 1804-1663, DOI: https://doi.org/10.1515/revecp-2016-0007.

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© by Petr Zimčík. This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License. BY-NC-ND 4.0

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