UC business student investigating tax issues in the U.S

Canterbury business student investigating tax issues in the United States

December 14, 2014

A University of Canterbury postgraduate business student is investigating tax issues in the United States so the knowledge gained from her study can help inform tax policy in other countries such as New Zealand using a technique more commonly used in medical and economics.

Nazila Alinaghi, whose research is being supervised by economics professor Bob Reed, says the work will look at the relationship between taxes and economic growth in United States.

``Almost all governments would agree that high economic growth is one of their primary goals. However, there is much uncertainty about how best to use fiscal policy to achieve this goal, Alinaghi says.

``Estimates of the effect of taxes on economic growth vary widely across studies. This makes it difficult for policy-makers to assess the consequences of different tax policies.

``The reason for focusing on the US is because each state sets an independent tax policy. This provides 50 laboratories to evaluate the consequences of different tax policies and this will help better understand tax policy in New Zealand.

``I will be examining a large collection of results from individual studies. It is the study of studies. The aggregation of empirical results across many studies makes it possible to identify a consensus across a full body of research.

``Successful analysis should be as comprehensive as possible, subject to the original studies satisfying a set of common characteristics. My research evaluated thousands of studies before identifying 44 studies that satisfied my criteria.

``To develop as comprehensive database as possible, I contacted over 60 prominent researchers in the tax and growth area. I sent them a bibliography of all the research I had identified, and asked for their assistance in locating additional studies.

``What makes this method different from a normal empirical study is that the data to be analysed consists of empirical results from other studies. The characteristics of each study are categorised in order to identify research features that may explain why different studies obtain different results.

``My research will examine over 1000 estimates produced by 44 studies to determine the actual relationship between taxes and economic growth.

``An important feature of this work is that it does not treat all estimates the same. In aggregating the estimates, some are given greater weight depending on how precisely they are estimated.

``This meta-analysis has long been employed in the medical and educational fields. It is only recently that it has come to be used in economics. By applying this relatively new to economics procedure, I aim to synthesise the findings of the large tax and growth literature so that it can be of use to policy-makers,’’ Alinaghi says.

A total of 2109 students studied business and economics at the University of Canterbury this year, with 368 studying at postgraduate level.

ENDS

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