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TAX POLICY AND MACROECONOMIC ACTIVITY IN BARBADOS

This paper examines the effects of tax policies on economic growth in Barbados. Rather than employing commonly used tax measures, which tend to yield more biased results, this study adds to the literature by developing an index of taxation for 1970 to 2007, based on documented policy changes. Using a standard growth regression and the unrestricted error correction model approach, the impact of changes in the overall level of taxation on economic growth is identified. The growth effects of changes in specific taxes are also investigated.
 

Tax Policy and Macroeconomic Activity in Barbados