Asymmetric Effects of Tax Competition on FDI vs. Budget Balance in European OECD Economies: Heterogeneous Panel Approach †
Abstract
:1. Introduction
2. Literature Review
3. Descriptive Analysis: EATR, FDI, and BB
4. Methodology and Data
4.1. Pooled Mean Group vs. Mean Group Estimator
Non-Linear Pooled Mean Group Estimator
4.2. Robust Check—Common Correlated Effects (CCE)
5. Empirical Results and Discussion
5.1. Heterogeneous Effects of EATR on FDI and BB: Pooled Mean Group vs. Mean Group Estimator Results
5.2. Asymmetric Effects of EATR on FDI and BB: Before and after Crisis (Pooled) Mean Group Estimator Results
5.3. Asymmetric Effects of EATR on FDI and BB: Nonlinear Pooled Mean Group vs. Nonlinear Mean Group Estimator Results
5.4. Robustness Check
6. Conclusions
Author Contributions
Funding
Data Availability Statement
Acknowledgments
Conflicts of Interest
References
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Variables | Pesaran CD Test | p-Values | Lags | Pesaran (CIPS) Test in the Level | p-Values | Pesaran (CIPS) Test at the First Differences | p-Values | Westerlund Cointegration Test | p-Values | |
---|---|---|---|---|---|---|---|---|---|---|
Sample: 22 European OECD economies; period 1998–2021 | ||||||||||
EATR | 37.97 | 0.000 | 0 | −1.190 | 0.117 | −13.937 | 0.000 | Pt | −9.552 | 0.000 |
1 | −1.566 | 0.059 | −5.892 | 0.000 | ||||||
2 | −1.003 | 0.158 | −3.881 | 0.000 | ||||||
FDI | 10.36 | 0.000 | 0 | −7.694 | 0.000 | −19.935 | 0.000 | Pa | −6.782 | 0.000 |
1 | −2.479 | 0.007 | −14.416 | 0.000 | ||||||
2 | 0.396 | 0.654 | −5.586 | 0.000 | ||||||
Sample: 22 European OECD economies; period 1998–2021 | ||||||||||
EATR | 36.35 | 0.000 | 0 | −1.190 | 0.117 | −13.937 | 0.000 | Pt | −9.640 | 0.000 |
1 | −1.566 | 0.059 | −5.892 | 0.000 | ||||||
2 | −1.003 | 0.158 | −3.881 | 0.000 | ||||||
BB | 33.93 | 0.000 | 0 | −0.758 | 0.224 | −17.016 | 0.000 | Pa | −6.887 | 0.000 |
1 | 1.450 | 0.926 | −5.186 | 0.000 | ||||||
2 | 2.163 | 0.985 | −2.929 | 0.002 |
Sample: | 22 European OECD Economies; Period 1998–2021 | ||||||||
Dependent Variable: FDI Panel (a) | Long-Run Equilibrium (θ) | Error-Correction (Φi) | Dependent Variable: BB Panel (b) | Long-Run Equilibrium (θ) | Error-Correction (Φi) | ||||
Coef. | p-Value | Coef. | p-Value | Coef. | p-Value | Coef. | p-Value | ||
MG | −0.0519 | 0.523 | −0.724 | 0.000 | MG | 0.144 | 0.118 | −0.486 | 0.000 |
PMG | −0.098 | 0.006 | −0.703 | 0.000 | PMG | 0.182 | 0.001 | −0.446 | 0.000 |
Hausman test statistic | 0.5537 | Hausman test statistic | 0.6258 | ||||||
Sample: | 14 Developed European OECD economies; period 1998–2021 | ||||||||
Dependent variable: FDI Panel (c) | Long-Run Equilibrium (θ) | Error-Correction (Φi) | Dependent variable: BB Panel (d) | Long-Run Equilibrium (θ) | Error-Correction (Φi) | ||||
Coef. | p-Value | Coef. | p-Value | Coef. | p-Value | Coef. | p-Value | ||
MG | −2.745 | 0.785 | −0.852 | 0.000 | MG | 0.116 | 0.383 | −0.500 | 0.000 |
PMG | −1.678 | 0.002 | −0.826 | 0.000 | PM | 0.210 | 0.001 | −0.453 | 0.000 |
Hausman test statistic | 0.9053 | Hausman test statistic | 0.4312 | ||||||
Sample: | 8 Emerging European OECD economies; period 1998–2021 | ||||||||
Dependent variable: FDI Panel (e) | Long-Run Equilibrium (θ) | Error-Correction (Φi) | Dependent variable: BB Panel (f) | Long-Run Equilibrium (θ) | Error-Correction (Φi) | ||||
Coef. | p-Value | Coef. | p-Value | Coef. | p-Value | Coef. | p-Value | ||
MG | −2.051 | 0.245 | −0.726 | 0.000 | MG | 0.193 | 0.078 | −0.463 | 0.000 |
PMG | −1.271 | 0.000 | −0.660 | 0.000 | PMG | 0.126 | 0.006 | −0.435 | 0.000 |
Hausman test statistic | 0.3980 | Hausman test statistic | 0.3152 |
Sample: 22 European OECD Economies; Period 1998–2021 | ||||||||
---|---|---|---|---|---|---|---|---|
(a) Dependent Variable: FDI | (b) Dependent Variable: BB | |||||||
PMG Estimator | Error-Correction (Φi) | ∆EATR | Error-Correction (Φi) | ∆EATR | ||||
Emerging European OECD Economies | Coef. | p-Value | Coef. | p-Value | Coef. | p-Value | Coef. | p-Value |
Czech | −1.215 | 0.000 | −0.0508 | 0.614 | −0.7058 | 0.002 | 0.245553 | 0.559 |
Estonia | −0.364 | 0.026 | 0.066 | 0.418 | −0.2912 | 0.043 | 0.39071 | 0.381 |
Latvia | −0.357 | 0.022 | 0.0321 | 0.431 | −0.5860 | 0.009 | 0.0605 | 0.829 |
Lithuania | −0.245 | 0.141 | 0.0075 | −0.075 | −0.3207 | 0.135 | −0.2693 | 0.344 |
Hungary | −0.056 | 0.603 | 0.115 | 0.108 | −0.4261 | 0.012 | −0.1321 | 0.435 |
Poland | −0.692 | 0.000 | 0.0109 | −0.0486 | −0.4004 | 0.016 | −0.114 | 0.593 |
Slovenia | −0.531 | 0.002 | 0.3158 | 0.048 | −0.552 | 0.004 | 0.3822 | 0.474 |
Slovakia | −0.7789 | 0.000 | 0.037 | 0.220 | −0.1721 | 0.251 | −0.2038 | 0.227 |
Developed European OECD economies | ||||||||
Austria | −0.897 | 0.001 | −0.0098 | 0.924 | −0.6625 | 0.003 | −0.0941 | 0.695 |
Belgium | −0.7156 | 0.020 | −0.032 | 0.621 | −0.6331 | 0.002 | −0.0505 | 0.840 |
Denmark | −1.01 | 0.000 | −0.104 | 0.225 | −0.306 | 0.036 | −0.3181 | 0.539 |
Finland | −1.133 | 0.000 | 0.061 | 0.383 | −0.389 | 0.025 | −0.2825 | 0.473 |
France | −0.9503 | 0.000 | 0.0047 | 0.018 | −0.233 | 0.078 | −0.170 | 0.615 |
Germany | −0.733 | 0.001 | 0.023 | 0.487 | −0.5338 | 0.003 | 0.3909 | 0.045 |
Greece | −0.476 | 0.000 | 0.073 | 0.025 | −0.2321 | 0.090 | −0.272 | 0.018 |
Ireland | −0.5023 | 0.023 | −0.005 | 0.927 | −0.399 | 0.017 | −0.251 | 0.808 |
Italy | −1.037 | 0.000 | −0.0028 | 0.973 | −0.324 | 0.043 | −0.221 | 0.804 |
Luxembourg | −0.727 | 0.019 | −0.122 | 0.457 | −0.829 | 0.000 | −0.298 | 0.236 |
Netherlands | −0.346 | 0.044 | −0.026 | 0.43 | −0.579 | 0.002 | −0.396 | 0.283 |
Portugal | −0.925 | 0.000 | 0.1283 | 0.009 | −0.481 | 0.005 | 0.0485 | 0.914 |
Spain | −1.313 | 0.000 | 0.0341 | 0.201 | −0.394 | 0.016 | −0.887 | 0.138 |
Sweden | −0.450 | 0.050 | 0.204 | 0.148 | −0.3793 | 0.021 | −0.0364 | 0.947 |
Sample: | 22 European OECD Economies; Period before Global Crisis 1998–2007 | ||||||||
Dependent Variable: FDI Panel (a) | Long-Run Equilibrium (θ) | Error-Correction (Φi) | Dependent Variable: BB Panel (b) | Long-Run Equilibrium (θ) | Error-Correction (Φi) | ||||
Coef. | p-Value | Coef. | p-Value | Coef. | p-Value | Coef. | p-Value | ||
MG | −0.202 | 0.309 | −0.161 | 0.034 | MG | 0.667 | 0.017 | −0.735 | 0.000 |
PMG | −1.957 | 0.000 | −0.691 | 0.000 | PMG | 0.764 | 0.000 | −0.453 | 0.000 |
Hausman test statistic | 0.2687 | Hausman test statistic | 0.7554 | ||||||
Sample: | 22 European OECD Economies; Period after Global Crisis 2008–2021 | ||||||||
Dependent Variable: FDI Panel (c) | Long-Run Equilibrium (θ) | Error-Correction (Φi) | Dependent Variable: BB Panel (d) | Long-Run Equilibrium (θ) | Error-Correction (Φi) | ||||
Coef. | p-Value | Coef. | p-Value | Coef. | p-Value | Coef. | p-Value | ||
MG | −2.97 | 0.334 | −1.013 | 0.000 | MG | 1.017 | 0.448 | −0.762 | 0.000 |
PMG | −1.290 | 0.028 | −0.938 | 0.000 | PMG | 0.078 | 0.035 | −0.573 | 0.000 |
Hausman test statistic | 0.4273 | Hausman test statistic | 0.5560 |
Sample | 22 European OECD Economies; Period 1998–2021 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dependent Variable: FDI Panel (a) | Long-Run Equilibrium (θ) | Error-Correction (Φi) | Dependent Variable: BB Panel (b) | Long-Run Equilibrium (θ) | Error-Correction (Φi) | ||||||
Coef. | p-Value | Coef. | p-Value | Coef. | p-Value | Coef. | p-Value | ||||
MG | EATRdecre | −0.594 | 0.318 | −0.765 | 0.000 | MG | EATRdecre | 0.147 | 0.644 | −0.504 | 0.000 |
EATRincre | −0.560 | 0.335 | EATRincre | 0.311 | 0.228 | ||||||
PMG | EATRdecre | −0.2664 | 0.008 | −0.705 | 0.000 | PMG | EATRdecre | 0.338 | 0.001 | −0.454 | 0.000 |
EATRincre | −0.125 | 0.000 | EATRincre | 0.214 | 0.000 | ||||||
Hausman test statistic | 0.3915 | Hausman test statistic | 0.486 |
22 European OECD Economies; Period 1998–2021 | |||||
---|---|---|---|---|---|
Dependent Variable: FDI | Homogenous Coefficient | Dependent Variable: BB * | Homogenous Coefficient | ||
Coef. | p-Value | Coef. | p-Value | ||
EATR | −0.919 | 0.047 | EATR | 0.150 | 0.044 |
Long_IR | −0.477 | 0.087 | gdppc_growth | 0.099 | 0.000 |
Dummy_crisis | −0.318 | 0.000 | Labor | 4.156 | 0.083 |
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Beljić, M.; Glavaški, O.; Beker Pucar, E.; Stojkov, S.; Pejčić, J. Asymmetric Effects of Tax Competition on FDI vs. Budget Balance in European OECD Economies: Heterogeneous Panel Approach. Risks 2023, 11, 219. https://doi.org/10.3390/risks11120219
Beljić M, Glavaški O, Beker Pucar E, Stojkov S, Pejčić J. Asymmetric Effects of Tax Competition on FDI vs. Budget Balance in European OECD Economies: Heterogeneous Panel Approach. Risks. 2023; 11(12):219. https://doi.org/10.3390/risks11120219
Chicago/Turabian StyleBeljić, Marina, Olgica Glavaški, Emilija Beker Pucar, Stefan Stojkov, and Jovica Pejčić. 2023. "Asymmetric Effects of Tax Competition on FDI vs. Budget Balance in European OECD Economies: Heterogeneous Panel Approach" Risks 11, no. 12: 219. https://doi.org/10.3390/risks11120219