Taxation and economic growth: A historical and agnostic review

This article provides an agnostic, historical review of taxation and economic growth. It critically evaluates how the relationship between the two has evolved throughout modern history. After an introduction that provides a general overview of the relationship between taxation and growth, the articl...

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Bibliographic Details
Published in:Acta oeconomica 2023-01, Vol.73 (1), p.19-34
Main Authors: Tanzi, Vito, Şen, Hüseyin, Kaya, Ayşe
Format: Article
Language:English
Online Access:Get full text
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Summary:This article provides an agnostic, historical review of taxation and economic growth. It critically evaluates how the relationship between the two has evolved throughout modern history. After an introduction that provides a general overview of the relationship between taxation and growth, the article first discusses the positive role of taxes in promoting economic development in the pre-war and post-war periods of the 1940s. It then critically comments on Solow's neoclassical growth theory and explains the experience of stagflation faced by many advanced countries in the 1970s and its implications for tax theory. New growth theories that attribute an important role in economic growth to government policy in general and tax policy in particular are then discussed. This is followed by a rounded five-point assessment of the impact of taxes on growth. The article ends with a general conclusion.
ISSN:0001-6373
1588-2659
DOI:10.1556/032.2023.00003