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CN 34-1054/N

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Endogenous growth, tax rate structure and Chinas private consumption

  • 1.

    School of Management, University of Science and Technology of China, Hefei 230026, China

  • 2.

    School of Management, Anhui Jianzhu University, Hefei 230601, China

Cite this:
https://doi.org/10.3969/j.issn.0253-2778.2017.03.006
  • Received Date: 07 May 2015
  • Accepted Date: 20 September 2015
  • Rev Recd Date: 20 September 2015
  • Publish Date: 30 March 2017
    Abstract

  • Abstract

    Models of Milesi-Ferretti and Roubini were expanded, and the dynamic relationship between the tax rate on capital income, labor income, consumption and private consumption which are embedded into endogenous growth model was studied, explicit relationships between consumption growth rate and various parameters were obtained by the Hamilton function, and relationship between tax rate structure and consumption growth rate were obtained by numerical simulation. The empirical study based on the Chinese provincial panel data from 2002 to 2013 suggest that labor income tax rate had a significant positive effect on household consumption; capital income tax, consumption tax rate has a significant negative effect on consumption, namely labor income tax rate is crowding in private consumption, while, capital income tax, consumption tax rate are crowding out of private consumption.

    Abstract

    Models of Milesi-Ferretti and Roubini were expanded, and the dynamic relationship between the tax rate on capital income, labor income, consumption and private consumption which are embedded into endogenous growth model was studied, explicit relationships between consumption growth rate and various parameters were obtained by the Hamilton function, and relationship between tax rate structure and consumption growth rate were obtained by numerical simulation. The empirical study based on the Chinese provincial panel data from 2002 to 2013 suggest that labor income tax rate had a significant positive effect on household consumption; capital income tax, consumption tax rate has a significant negative effect on consumption, namely labor income tax rate is crowding in private consumption, while, capital income tax, consumption tax rate are crowding out of private consumption.
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    • References(24)
  • [1]
    BARRO R J. Government spending in a simple model of endogeneous growth [J]. Journal of Political Economy, 1990, 98(5): 103-125.
    [2]
    LEVINE R. Stock markets, growth, and tax policy [J]. The Journal of Finance, 1991, 46(4): 1445-1465.
    [3]
    MENDOZA E G, MILESI-FERRETTI G M, ASEA P. On the ineffectiveness of tax policy in altering long-run growth: Harbergers superneutrality conjecture[J].Journal of Public Economics,1997,66(1): 99-126.
    [4]
    BLEANEY M, GEMMELL N, KNELLERR. Testing the endogenous growth model public expenditure, taxation, and growth over the long run[J].Canadian Journal of Economics, 2001, 34(1): 36-57.
    [5]
    CHEN B L. Economic growth with an optimal public spending composition [J]. Oxford Economic Papers, 2006, 58(1): 123-136.
    [6]
    NOVALES A., PREZ R., RUIZ J. Optimal time-consistent fiscal policy in an endogenous growth economy with public consumption and capital [J]. Journal of Macroeconomics, 2014, 42(10): 104-117.
    [7]
    Milesi-Ferrett G M, Roubini N. Growth effects of income and consumption taxes: Positive and normative analysis[R]. Cambridge, MA: National Bureau of Economic Research, 1995: NBER Working Paper No. 5317.
    [8]
    TURNOVSKY S J. Fiscal policy, growth, and macroeconomic performance in a small open economy[J]. Journal of International Economics, 1996, 40:41-66.
    [9]
    CORSETTI G, ROUBININ. Optimal government spending and taxation in endogenous growth models[J].Journal of Public Economy,1996, 60(1) :21-44.
    [10]
    DENAUX Z S. Endogenous growth, taxes and government spending: Theory and evidence [J].Review of Development Economics, 2007, 11(1): 124-138.
    [11]
    ELDER R W, LAWRENCE B, FERGUSON A. The effectiveness of tax policy interventions for reducing excessive alcohol consumption and related harms[J]. American Journal of Preventive Medicine, 2010, 38(2): 217-229.
    [12]
    ANDREYEVA T, CHALOUPKA F J, BROWNELL K D. Estimating the potential of taxes on sugar-sweetened beverages to reduce consumption and generate revenue[J]. Preventive Medicine, 2011,52: 413-416.
    [13]
    ERCOLANI V, PAVONI N. The effect of government consumption on private consumption: Macro evidence from micro data [R]. mimeo Bocconi University and UCL: Job Market Paper, 2008.
    [14]
    习甜,王燕武.税收负担、税制结构与居民消费——中国经验的检验[J].公共经济研究, 2013(1):1-7.
    XI Tian, WANG Yanwu. Tax burden, tax structure and household consumption: Empirical analysis based on Chinas panel data[J]. Public Economics Studies, 2013(1):1-7.
    [15]
    武彦民,张远.我国财税政策与居民消费的实证分析[J].税务研究, 2011(2):24-29.
    [16]
    储德银,闫伟.税收政策与居民消费需求——基于结构效应视角的新思考[J].经济理论与经济管理, 2012(3): 53-63.
    CHU Deyin, YAN Wei. Tax policies and residents consumption demand: A new thought based on structure effects[J]. Economic Theory and Business Management, 2012(3): 53-63.
    [17]
    李香菊，周丽珠.扩大我国居民消费的税收政策研究——基于税收对消费影响的实证分析[J].财贸经济,2013(2):18-27.
    LI Xiangju, ZHOU Lizhu. Research on taxation policy of expanding residents consumption: Based on the empirical analysis on influence of taxation on consumption[J]. Finance & Trade Economics, 2013(2): 18-27.
    [18]
    龚六堂,邹恒甫.政府花费、税收、政府转移支付和内生经济增长[J]. 中国科学基金, 2000(1):15-18.
    GONG Liutang, ZOU Hengfu. Public expenditures, taxes, federal transfer, and endogenous growth[J]. Bulletin of National Science Foundation of China, 2000(1):15-18.
    [19]
    龚六堂,邹恒甫. 财政政策、政策与国外经济援助[J].经济研究, 2001(3):29-40.
    GONG Liutang, ZOU Hengfu. Foreign aid, public spending, optimal fiscal and monetary policies, and long-run growth[J]. Economic Research Journal, 2001(3):29-40.
    [20]
    胡适耕,吴付科.宏观经济的数理分析[M].北京:科学出版社,2004.
    [21]
    马拴友.税收结构与经济增长的实证分析——兼论我国的最优直接税/间接税结构[J].经济理论与经济管理,2001(7):15-20.
    MA Shuanyou. Positive analysis of tax structure and economic growth[J]. Economic Theory and Business Management, 2001(7):15-20.
    [22]
    刘初旺.我国消费、劳动和资本有效税率估计及其国际比较[J].财经论丛,2004(7):9-16.
    LIU Chuwang. Evaluation and international comparison of average effective tax rate of consumption labour and capital of China[J]. Collected Essays on Finance and Economics, 2004(7):9-16.
    [23]
    李凯,张生勃.中国资本、劳动、消费的有效税率测算——基于2003-2010年数据的实证研究[J].税务经济研究,2012(4):83-89.
    LI Kai, ZHANG Shengbo. The calculation of China’s tax rate of capital, labor and consumption [J]. Taxation Economic Research, 2004(7): 9-16.
    [24]
    贺俊,吴照?.财政分权、 经济增长与城乡收入差距——基于省际面板数据的分析[J].当代财经, 2013(5): 27-38.
    HE Jun, WU Zhaoyan. Fiscal decentralization, economic growth and urban-rural income gap: An analysis based on inter-provincial panel date[J]. Contemporary Finance & Economics, 2013(5): 27-38.)
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    [1]
    BARRO R J. Government spending in a simple model of endogeneous growth [J]. Journal of Political Economy, 1990, 98(5): 103-125.
    [2]
    LEVINE R. Stock markets, growth, and tax policy [J]. The Journal of Finance, 1991, 46(4): 1445-1465.
    [3]
    MENDOZA E G, MILESI-FERRETTI G M, ASEA P. On the ineffectiveness of tax policy in altering long-run growth: Harbergers superneutrality conjecture[J].Journal of Public Economics,1997,66(1): 99-126.
    [4]
    BLEANEY M, GEMMELL N, KNELLERR. Testing the endogenous growth model public expenditure, taxation, and growth over the long run[J].Canadian Journal of Economics, 2001, 34(1): 36-57.
    [5]
    CHEN B L. Economic growth with an optimal public spending composition [J]. Oxford Economic Papers, 2006, 58(1): 123-136.
    [6]
    NOVALES A., PREZ R., RUIZ J. Optimal time-consistent fiscal policy in an endogenous growth economy with public consumption and capital [J]. Journal of Macroeconomics, 2014, 42(10): 104-117.
    [7]
    Milesi-Ferrett G M, Roubini N. Growth effects of income and consumption taxes: Positive and normative analysis[R]. Cambridge, MA: National Bureau of Economic Research, 1995: NBER Working Paper No. 5317.
    [8]
    TURNOVSKY S J. Fiscal policy, growth, and macroeconomic performance in a small open economy[J]. Journal of International Economics, 1996, 40:41-66.
    [9]
    CORSETTI G, ROUBININ. Optimal government spending and taxation in endogenous growth models[J].Journal of Public Economy,1996, 60(1) :21-44.
    [10]
    DENAUX Z S. Endogenous growth, taxes and government spending: Theory and evidence [J].Review of Development Economics, 2007, 11(1): 124-138.
    [11]
    ELDER R W, LAWRENCE B, FERGUSON A. The effectiveness of tax policy interventions for reducing excessive alcohol consumption and related harms[J]. American Journal of Preventive Medicine, 2010, 38(2): 217-229.
    [12]
    ANDREYEVA T, CHALOUPKA F J, BROWNELL K D. Estimating the potential of taxes on sugar-sweetened beverages to reduce consumption and generate revenue[J]. Preventive Medicine, 2011,52: 413-416.
    [13]
    ERCOLANI V, PAVONI N. The effect of government consumption on private consumption: Macro evidence from micro data [R]. mimeo Bocconi University and UCL: Job Market Paper, 2008.
    [14]
    习甜,王燕武.税收负担、税制结构与居民消费——中国经验的检验[J].公共经济研究, 2013(1):1-7.
    XI Tian, WANG Yanwu. Tax burden, tax structure and household consumption: Empirical analysis based on Chinas panel data[J]. Public Economics Studies, 2013(1):1-7.
    [15]
    武彦民,张远.我国财税政策与居民消费的实证分析[J].税务研究, 2011(2):24-29.
    [16]
    储德银,闫伟.税收政策与居民消费需求——基于结构效应视角的新思考[J].经济理论与经济管理, 2012(3): 53-63.
    CHU Deyin, YAN Wei. Tax policies and residents consumption demand: A new thought based on structure effects[J]. Economic Theory and Business Management, 2012(3): 53-63.
    [17]
    李香菊，周丽珠.扩大我国居民消费的税收政策研究——基于税收对消费影响的实证分析[J].财贸经济,2013(2):18-27.
    LI Xiangju, ZHOU Lizhu. Research on taxation policy of expanding residents consumption: Based on the empirical analysis on influence of taxation on consumption[J]. Finance & Trade Economics, 2013(2): 18-27.
    [18]
    龚六堂,邹恒甫.政府花费、税收、政府转移支付和内生经济增长[J]. 中国科学基金, 2000(1):15-18.
    GONG Liutang, ZOU Hengfu. Public expenditures, taxes, federal transfer, and endogenous growth[J]. Bulletin of National Science Foundation of China, 2000(1):15-18.
    [19]
    龚六堂,邹恒甫. 财政政策、政策与国外经济援助[J].经济研究, 2001(3):29-40.
    GONG Liutang, ZOU Hengfu. Foreign aid, public spending, optimal fiscal and monetary policies, and long-run growth[J]. Economic Research Journal, 2001(3):29-40.
    [20]
    胡适耕,吴付科.宏观经济的数理分析[M].北京:科学出版社,2004.
    [21]
    马拴友.税收结构与经济增长的实证分析——兼论我国的最优直接税/间接税结构[J].经济理论与经济管理,2001(7):15-20.
    MA Shuanyou. Positive analysis of tax structure and economic growth[J]. Economic Theory and Business Management, 2001(7):15-20.
    [22]
    刘初旺.我国消费、劳动和资本有效税率估计及其国际比较[J].财经论丛,2004(7):9-16.
    LIU Chuwang. Evaluation and international comparison of average effective tax rate of consumption labour and capital of China[J]. Collected Essays on Finance and Economics, 2004(7):9-16.
    [23]
    李凯,张生勃.中国资本、劳动、消费的有效税率测算——基于2003-2010年数据的实证研究[J].税务经济研究,2012(4):83-89.
    LI Kai, ZHANG Shengbo. The calculation of China’s tax rate of capital, labor and consumption [J]. Taxation Economic Research, 2004(7): 9-16.
    [24]
    贺俊,吴照?.财政分权、 经济增长与城乡收入差距——基于省际面板数据的分析[J].当代财经, 2013(5): 27-38.
    HE Jun, WU Zhaoyan. Fiscal decentralization, economic growth and urban-rural income gap: An analysis based on inter-provincial panel date[J]. Contemporary Finance & Economics, 2013(5): 27-38.)
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