Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/233796 
Year of Publication: 
2020
Series/Report no.: 
EconPol Working Paper No. 51
Publisher: 
ifo Institute - Leibniz Institute for Economic Research at the University of Munich, Munich
Abstract: 
We evaluate the effects of structural tax reforms on government spending efficiency in a sample of OECD economies over the period 2007-2016. After calculating input spending efficiency scores, we assess the relevance for efficiency of narrative tax changes in a panel setup. We find that: i) input efficiency scores average around 0.6-07; ii) increases in the tax rates are reflected in falling public sector efficiency; iii) such negative effect is significant for PIT and VAT; iv) controlling for endogeneity, increases in tax rates are still associated with lower public sector efficiency, mainly in PIT; v) increasing tax bases for PIT and VAT improve public sector efficiency; vi) in economic expansion periods, increasing CIT base and reducing PIT rates, positively affect public sector efficiency; ix) in recessions, efficiency improves when PIT and VAT bases increase and CIT rate increases.
Subjects: 
government spending efficiency
tax reforms
data envelopment analysis
non-parametric estimation
panel data
political economy
JEL: 
C14
C23
H11
H21
H50
Document Type: 
Working Paper

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