THE ROLE OF TAX POLICY IN INCREASING GDP
DOI:
https://doi.org/10.55640/Keywords:
tax policy, GDP growth, Laffer curve, fiscal incentives, international tax competition, endogenous growthAbstract
Tax policy is considered one of the main tools for macroeconomic stability and economic growth. This article presents a scientific-theoretical and empirical analysis of the role of tax policy in gross domestic product (GDP) growth. Based on Keynesian, neoclassical and endogenous growth theories, the impact of tax rates on investment, labor supply, consumption and innovation is considered. Complex mechanisms such as the Laffer curve, tax competition and fiscal devaluation are analyzed. International experiences (the USA, Germany, Singapore, China and Scandinavian countries) show the impact of tax reforms on GDP. Short-term and long-term effects of tax policy are estimated based on empirical models (panel data regression and DSGE models). The results show that optimal tax policy can increase GDP growth by 1.5–3 percentage points if it stimulates investment and innovation, but when used incorrectly, it leads to a decrease in fiscal deficits and growth. The article provides practical recommendations for developing countries.
References
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3.IMF (2023). “Fiscal Monitor: Tax Policy for Inclusive Growth”. Washington, DC.
4.OECD (2024). “Tax Policy Reforms 2024”. Paris.
5.Mertens, K., & Ravn, M. (2013). “The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States”. American Economic Review.
6.Trabandt, M., & Uhlig, H. (2011). The Laffer Curve Revisited. Journal of Monetary Economics.
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