Essays on tax policy, institutions, and output

This thesis first examines the interplay among natural resources, the institutions and economic growth, and then deals with the effects of tax policies, with a special focus on the effects of flat income taxes and legislated tax changes. Chapter 2 focuses on the interplay among resource abundance, institutional quality, and economic growth in China, using two different measures of resource abundance, and employs various econometric approaches including a panel-data time-varying coefficient model. Chapter 3 studies which factors have determined the adoption of fl at income taxes and whether these taxes have been effective in raising revenue. On the basis of a panel dataset, an adoption equation and a revenue equation is estimated separately. Chapter 4 empirically investigates the behavior of the credit spread over the business cycle, and studies the relationship between the fiscal stimulus and the credit spread. This chapter first uses a structural vector autoregressive (SVAR) model. To avoid omitted variable bias and limited information in SVAR model, we also use a factor augmented vector autoregressive (FAVAR) model, effectively combining the narrative and recursive approaches for identification of exogenous tax changes. To see if the U.S. experience applies in other countries, we make a comparison between the U.S. and U.K.