An impulse response function for corporate taxes in Barbados
By: CAMPBELL, Trevor
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ArticlePublisher: Philadelphia : Routledge, November 2009International Journal of Public Administration - IJPA 32, 13, p. 1147-1161Abstract: For many years, corporate taxes have been an important source of Government revenue in Barbados. The variable, namely, rate of corporate tax, real income and the rate of interest were selected when applying an impulse response function to the model for corporate taxes. The function revealed the following results after respective new equilibria were attained: First, corporate taxes would contract if the rate of corporate tax had experienced an upward shock. Second, corporate tax inflows would rise sharply from an upward shock to real income. Finally, an upward shock to the rate of interest would result in a steep contraction in corporate taxes.
For many years, corporate taxes have been an important source of Government revenue in Barbados. The variable, namely, rate of corporate tax, real income and the rate of interest were selected when applying an impulse response function to the model for corporate taxes. The function revealed the following results after respective new equilibria were attained: First, corporate taxes would contract if the rate of corporate tax had experienced an upward shock. Second, corporate tax inflows would rise sharply from an upward shock to real income. Finally, an upward shock to the rate of interest would result in a steep contraction in corporate taxes.
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