Corporate income taxation and external balances in the European Union

Figures & data

Table 1. Results of 2SLS estimations – basic model.

Dependent variable: change in external balance ($\Delta {\mathit{\text{eb}}}_t$)
$\mathit{\text{eb}}:$	$\mathit{\text{cab}}$	$\mathit{\text{cab}}$	$\mathit{\text{cab}}$	$\mathit{\text{tbgs}}$	$\mathit{\text{tbgs}}$	$\mathit{\text{tbgs}}$
$\mathit{\text{tv}}:$	$\mathit{\text{citr}}$	$\mathit{\text{eatr}}$	$\mathit{\text{emtr}}$	$\mathit{\text{citr}}$	$\mathit{\text{eatr}}$	$\mathit{\text{emtr}}$
	(1)	(2)	(3)	(4)	(5)	(6)
${\mathit{\text{eb}}}_{t-1}$	−0.22*	−0.20*	−0.19	−0.21***	−0.18**	−0.18**
	(0.12)	(0.11)	(0.12)	(0.08)	(0.08)	(0.08)
$\Delta {\mathit{\text{gdpg}}}_t$	−0.03	−0.03	−0.05	0.10	0.11	0.08
	(0.11)	(0.11)	(0.11)	(0.11)	(0.11)	(0.11)
${\mathit{\text{gdpg}}}_{t-1}$	−0.13	−0.12	−0.12	−0.10	−0.09	−0.10
	(0.13)	(0.13)	(0.13)	(0.12)	(0.12)	(0.12)
$\Delta {\mathit{\text{ur}}}_t$	0.84***	0.87***	0.89***	0.63***	0.66***	0.66***
	(0.20)	(0.20)	(0.21)	(0.15)	(0.15)	(0.16)
${\mathit{\text{ur}}}_{t-1}$	0.12	0.13	0.14	0.05	0.05	0.07
	(0.08)	(0.09)	(0.09)	(0.06)	(0.06)	(0.07)
$\Delta {\mathit{\text{grev}}}_t$	−0.43**	−0.43*	−0.44*	−0.56***	−0.56***	−0.57***
	(0.22)	(0.22)	(0.22)	(0.21)	(0.21)	(0.22)
${\mathit{\text{grev}}}_{t-1}$	−0.05	−0.04	−0.03	−0.14	−0.12	−0.11
	(0.22)	(0.23)	(0.23)	(0.22)	(0.23)	(0.23)
$\Delta {\mathit{\text{ggb}}}_t$	0.10	0.10	0.10	0.08	0.08	0.09
	(0.10)	(0.10)	(0.10)	(0.08)	(0.08)	(0.08)
${\mathit{\text{ggb}}}_{t-1}$	0.08	0.09	0.10	−0.00	−0.01	0.02
	(0.10)	(0.10)	(0.11)	(0.08)	(0.08)	(0.09)
$\Delta {\mathit{\text{dep}}}_t$	0.36	0.30	0.38	0.02	−0.07	0.05
	(0.44)	(0.43)	(0.41)	(0.38)	(0.38)	(0.36)
${\mathit{\text{dep}}}_{t-1}$	0.24**	0.28***	0.27**	0.22**	0.26***	0.22**
	(0.11)	(0.11)	(0.11)	(0.09)	(0.09)	(0.09)
${\mathit{\text{iip}}}_{t-2}$	−0.00	−0.00	−0.00	−0.00	−0.00	0.00
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)
${\mathit{\text{eu}}}_t$	0.98*	0.87	0.92	0.87	0.86	0.93
	(0.56)	(0.58)	(0.59)	(0.53)	(0.57)	(0.57)
${\mathit{\text{ea}}}_t$	−0.02	0.03	0.10	0.16	0.08	0.21
	(0.72)	(0.77)	(0.79)	(0.60)	(0.64)	(0.66)
$\Delta {\mathit{\text{tv}}}_t$	0.16**	0.09	−0.04	0.15**	0.08	−0.05
	(0.07)	(0.10)	(0.04)	(0.06)	(0.08)	(0.04)
${\mathit{\text{tv}}}_{t-1}$	0.08	0.09	0.02	0.12***	0.14**	0.02
	(0.05)	(0.06)	(0.03)	(0.04)	(0.05)	(0.02)
Long-term effect of $\mathit{\text{tv}}$	0.37	0.45	0.10	0.58**	0.42*	0.12
Observations	489	484	478	488	483	477
K-P LM statistic	52.08***	51.05***	45.06***	78.20***	76.59***	70.10***
Hansen J	0.45	0.28	0.29	0.02	0.00	0.00
Adjusted $R^2$	0.29	0.28	0.28	0.30	0.29	0.29

Notes: Heteroskedasticity-robust standard errors in parentheses. ***, **, and * denote statistical significance at the 1, 5, and 10% levels, respectively. Instrumented: lagged level of external balance. Included instruments: all other variables. Excluded instruments: second lags of the final consumption of households and gross fixed capital formation variables.

Source: Author’s calculations.

Table 2. Results of 2SLS estimations – model with $\mathit{\text{ea}}$ interaction term.

Dependent variable: change in external balance ($\Delta {\mathit{\text{eb}}}_t$)
$\mathit{\text{eb}}:$	$\mathit{\text{cab}}$	$\mathit{\text{cab}}$	$\mathit{\text{cab}}$	$\mathit{\text{tbgs}}$	$\mathit{\text{tbgs}}$	$\mathit{\text{tbgs}}$
$\mathit{\text{tv}}:$	$\mathit{\text{citr}}$	$\mathit{\text{eatr}}$	$\mathit{\text{emtr}}$	$\mathit{\text{citr}}$	$\mathit{\text{eatr}}$	$\mathit{\text{emtr}}$
	(1)	(2)	(3)	(4)	(5)	(6)
${\mathit{\text{eb}}}_{t-1}$	−0.19	−0.18	−0.18	−0.19**	−0.18**	−0.18**
	(0.11)	(0.11)	(0.11)	(0.08)	(0.08)	(0.08)
$\Delta {\mathit{\text{gdpg}}}_t$	−0.01	−0.01	−0.05	0.12	0.12	0.08
	(0.11)	(0.11)	(0.11)	(0.11)	(0.11)	(0.11)
${\mathit{\text{gdpg}}}_{t-1}$	−0.11	−0.10	−0.13	−0.09	−0.07	−0.10
	(0.13)	(0.13)	(0.13)	(0.12)	(0.12)	(0.13)
$\Delta {\mathit{\text{ur}}}_t$	0.85***	0.89***	0.90***	0.63***	0.67***	0.66***
	(0.20)	(0.20)	(0.20)	(0.15)	(0.15)	(0.15)
${\mathit{\text{ur}}}_{t-1}$	0.11	0.13	0.13	0.04	0.05	0.06
	(0.08)	(0.08)	(0.08)	(0.06)	(0.06)	(0.06)
$\Delta {\mathit{\text{grev}}}_t$	−0.43**	−0.42*	−0.46**	−0.56***	−0.55***	−0.58***
	(0.22)	(0.22)	(0.22)	(0.21)	(0.21)	(0.22)
${\mathit{\text{grev}}}_{t-1}$	−0.06	−0.05	−0.05	−0.15	−0.13	−0.12
	(0.23)	(0.23)	(0.23)	(0.23)	(0.23)	(0.24)
$\Delta {\mathit{\text{ggb}}}_t$	0.09	0.09	0.09	0.07	0.06	0.08
	(0.10)	(0.10)	(0.10)	(0.08)	(0.08)	(0.08)
${\mathit{\text{ggb}}}_{t-1}$	0.08	0.08	0.09	−0.01	−0.01	0.01
	(0.10)	(0.10)	(0.10)	(0.08)	(0.08)	(0.09)
$\Delta {\mathit{\text{dep}}}_t$	0.41	0.34	0.48	0.05	−0.04	0.08
	(0.45)	(0.44)	(0.44)	(0.39)	(0.39)	(0.37)
${\mathit{\text{dep}}}_{t-1}$	0.22**	0.26**	0.29**	0.20**	0.25***	0.22**
	(0.10)	(0.11)	(0.11)	(0.09)	(0.09)	(0.09)
${\mathit{\text{iip}}}_{t-2}$	−0.00	−0.00	−0.00	0.00	0.00	0.00
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)
${\mathit{\text{eu}}}_t$	1.00*	0.94	1.00*	0.89*	0.90	0.93
	(0.56)	(0.59)	(0.59)	(0.57)	(0.57)	(0.58)
$\Delta {\mathit{\text{tv}}}_t\times {\mathit{\text{ea}}}_t$	0.07	−0.05	−0.07**	0.08	−0.02	−0.06*
	(0.07)	(0.09)	(0.03)	(0.06)	(0.08)	(0.03)
${\mathit{\text{tv}}}_{t-1}\times {\mathit{\text{ea}}}_t$	0.07	0.09	0.02	0.11**	0.14***	0.02
	(0.05)	(0.06)	(0.03)	(0.04)	(0.05)	(0.02)
$\Delta {\mathit{\text{tv}}}_t\times {\mathit{\text{non}}-\mathit{\text{ea}}}_t$	0.44***	0.55***	0.41**	0.39***	0.41***	0.13
	(0.17)	(0.20)	(0.18)	(0.14)	(0.15)	(0.11)
${\mathit{\text{tv}}}_{t-1}\times {\mathit{\text{non}}-\mathit{\text{ea}}}_t$	0.10*	0.11*	0.05	0.13***	0.16**	0.02
	(0.06)	(0.07)	(0.06)	(0.05)	(0.06)	(0.06)
Observations	489	484	478	488	483	477
K-P LM statistic	52.51***	52.84***	50.23***	78.54***	78.08***	75.63***
Hansen J	0.43	0.28	0.24	0.03	0.00	0.00
Adjusted $R^2$	0.29	0.29	0.29	0.30	0.30	0.28

Notes: Heteroskedasticity-robust standard errors in parentheses. ***, ** and * denote statistical significance at the 1, 5 and 10% levels, respectively. Instrumented: lagged level of external balance. Included instruments: all other variables. Excluded instruments: second lags of the final consumption of households and gross fixed capital formation variables.

Source: Author’s calculations.

Table 3. Long-term effects of corporate taxation – model with $\mathit{\text{ea}}$ interaction term.

Dependent variable: change in external balance ($\Delta {\mathit{\text{eb}}}_t$)
$\mathit{\text{eb}}:$	$\mathit{\text{cab}}$	$\mathit{\text{cab}}$	$\mathit{\text{cab}}$
$\mathit{\text{tv}}:$	$\mathit{\text{citr}}$	$\mathit{\text{eatr}}$	$\mathit{\text{emtr}}$
(a) Euro area long-term effect of $\mathit{\text{tv}}$	0.37	0.47	0.11
(b) Non-euro area long-term effect of $\mathit{\text{tv}}$	0.52	0.62	0.26
H0: (a) – (b) = 0; χ^2(1) statistic	0.49	0.57	0.18
$\mathit{\text{eb}}:$	$\mathit{\text{tbgs}}$	$\mathit{\text{tbgs}}$	$\mathit{\text{tbgs}}$
$\mathit{\text{tv}}:$	$\mathit{\text{citr}}$	$\mathit{\text{eatr}}$	$\mathit{\text{emtr}}$
(a) Euro area long-term effect of $\mathit{\text{tv}}$	0.59**	0.79*	0.13
(b) Non-euro area long-term effect of $\mathit{\text{tv}}$	0.67*	0.89	0.10
H0: (a) – (b) = 0; χ^2(1) statistic	0.28	0.21	0.01

Note: ***, ** and * denote statistical significance at the 1, 5 and 10% levels, respectively.

Source: Author’s calculations.

Table

Variable	Number of observations	Mean	Standard deviation	Min	Max	Median	25^th percentile	75^th percentile
cab	657	−0.91	5.56	−23.90	13.90	−0.60	−4.10	2.60
tbgs	647	1.70	8.83	−20.27	45.15	0.73	−2.08	4.76
citr	755	26.31	8.64	10.00	56.80	25.50	20.00	33.99
eatr	671	22.61	7.15	8.80	41.20	22.60	16.70	28.10
emtr	644	16.41	9.01	−19.50	37.90	16.55	11.30	21.88
gdpg	721	2.52	3.74	−14.84	25.18	2.73	1.14	4.48
ur	724	8.64	4.25	2.00	2.78	7.70	5.70	10.30
grev	730	39.66	6.59	19.00	55.50	38.55	34.96	45.14
ggb	751	−2.71	3.51	−32.10	6.90	−2.60	−4.50	−0.30
dep	748	24.71	4.60	15.60	37.00	24.50	21.23	27.80
iip	570	−112.58	531.56	−4,635.10	260.80	−14.75	−34.65	1.10
fch	754	54.54	8.25	23.91	76.64	54.61	49.07	61.28
gfcf	754	22.16	4.26	4.45	53.59	21.79	19.71	24.14
EU	756	0.82	0.38	0	1	1	1	1
euro	756	0.47	0.50	0	1	0	0	1

Table B1. Results of fixed-effects estimations – basic model.

Dependent variable: change in external balance ($\Delta {\mathit{\text{eb}}}_t$)
$\mathit{\text{eb}}:$	$\mathit{\text{cab}}$	$\mathit{\text{cab}}$	$\mathit{\text{cab}}$	$\mathit{\text{tbgs}}$	$\mathit{\text{tbgs}}$	$\mathit{\text{tbgs}}$
$\mathit{\text{tv}}:$	$\mathit{\text{citr}}$	$\mathit{\text{eatr}}$	$\mathit{\text{emtr}}$	$\mathit{\text{citr}}$	$\mathit{\text{eatr}}$	$\mathit{\text{emtr}}$
	(1)	(2)	(3)	(4)	(5)	(6)
${\mathit{\text{eb}}}_{t-1}$	−0.45***	−0.45***	−0.45***	−0.39***	−0.37***	−0.37***
	(0.04)	(0.04)	(0.04)	(0.04)	(0.04)	(0.04)
$\Delta {\mathit{\text{gdpg}}}_t$	−0.04	−0.04	−0.06	0.08	0.09	0.06
	(0.06)	(0.06)	(0.06)	(0.06)	(0.06)	(0.06)
${\mathit{\text{gdpg}}}_{t-1}$	−0.18**	−0.17**	−0.18**	−0.13*	−0.11	−0.14*
	(0.08)	(0.08)	(0.08)	(0.07)	(0.07)	(0.07)
$\Delta {\mathit{\text{ur}}}_t$	0.78***	0.81***	0.82***	0.61***	0.64***	0.63***
	(0.13)	(0.13)	(0.13)	(0.12)	(0.12)	(0.12)
${\mathit{\text{ur}}}_{t-1}$	0.24***	0.26***	0.28***	0.14**	0.15**	0.16***
	(0.06)	(0.06)	(0.06)	(0.06)	(0.06)	0.06
$\Delta {\mathit{\text{grev}}}_t$	−0.30**	−0.29**	−0.31**	−0.50***	−0.49***	−0.52***
	(0.13)	(0.13)	(0.13)	(0.11)	(0.12)	(0.12)
${\mathit{\text{grev}}}_{t-1}$	−0.01	−0.02	0.02	−0.15**	−0.13*	−0.12*
	(0.08)	(0.08)	(0.08)	(0.07)	(0.07)	(0.07)
$\Delta {\mathit{\text{ggb}}}_t$	0.16**	0.16**	0.17***	0.12**	0.12**	0.14**
	(0.06)	(0.06)	(0.06)	(0.06)	(0.06)	(0.06)
${\mathit{\text{ggb}}}_{t-1}$	0.17***	0.19***	0.21***	0.06	0.07	0.10
	(0.07)	(0.07)	(0.07)	(0.06)	(0.06)	(0.06)
$\Delta {\mathit{\text{dep}}}_t$	0.06	0.01	0.16	−0.27	−0.34	−0.14
	(0.43)	(0.44)	(0.44)	(0.39)	(0.41)	(0.41)
${\mathit{\text{dep}}}_{t-1}$	0.25**	0.30**	0.26**	0.23**	0.27**	0.19
	(0.13)	(0.13)	(0.13)	(0.11)	(0.12)	(0.12)
${\mathit{\text{iip}}}_{t-2}$	0.00	0.00	0.00	0.00	0.00	0.00
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)
${\mathit{\text{eu}}}_t$	1.35*	1.25*	1.32*	1.15*	1.18*	1.28*
	(0.70)	(0.72)	(0.72)	(0.64)	(0.66)	(0.67)
${\mathit{\text{ea}}}_t$	0.80	0.99*	1.17*	0.89*	0.86	1.12**
	(0.57)	(0.59)	(0.60)	(0.52)	(0.55)	(0.56)
$\Delta {\mathit{\text{tv}}}_t$	0.16**	0.06	−0.05	0.17**	0.06	−0.07**
	(0.07)	(0.09)	(0.04)	(0.07)	(0.08)	(0.04)
${\mathit{\text{tv}}}_{t-1}$	0.11**	0.09	−0.01	0.17***	0.16**	−0.00
	(0.06)	(0.07)	(0.03)	(0.05)	(0.06)	(0.03)
Long-term effect of $\mathit{\text{tv}}$	0.25**	0.20	−0.02	0.43***	0.42**	−0.01
Observations	489	484	478	488	483	477
Adjusted $R^2$	0.35	0.34	0.35	0.34	0.33	0.33

Notes: Heteroskedasticity-robust standard errors in parentheses. ***, ** and * denote statistical significance at the 1, 5 and 10% levels, respectively.

Table B2. First-stage results and weak identification test statistics – basic model.

Dependent variable: lagged current account balance (${\mathit{\text{cab}}}_{t-1}$)
tax variable ($\mathit{\text{tv}}$):	$\mathit{\text{citr}}$	$\mathit{\text{eatr}}$	$\mathit{\text{emtr}}$
${\mathit{\text{fch}}}_{t-2}$	−0.45***	−0.46***	−0.46***
	(0.07)	(0.08)	(0.08)
${\mathit{\text{gfcf}}}_{t-2}$	−0.49***	−0.49***	−0.49***
	(0.09)	(0.09)	(0.10)
Weak identification tests with H0: instruments are weak^1
Cragg-Donald Wald F statistic	47.71	48.80	43.59
K-P Wald rk F statistic	27.01	26.94	23.82
Dependent variable: lagged balance of trade in goods and services (${\mathit{\text{tbgs}}}_{t-1}$)
tax variable ($\mathit{\text{tv}}$):	$\mathit{\text{citr}}$	$\mathit{\text{eatr}}$	$\mathit{\text{emtr}}$
${\mathit{\text{fch}}}_{t-2}$	−0.42***	−0.41***	−0.41***
	(0.09)	(0.09)	(0.10)
${\mathit{\text{gfcf}}}_{t-2}$	−0.42***	−0.40***	−0.40***
	(0.12)	(0.12)	(0.12)
Weak identification tests with H0: instruments are weak^1
Cragg-Donald Wald F statistic	112.47	116.41	102.97
K-P Wald rk F statistic	57.70	58.75	51.39

Notes: Heteroskedasticity-robust standard errors in parentheses. ***, ** and * denote statistical significance at the 1, 5 and 10% levels, respectively.

¹Critical values for the weak instrument test based on size, with one endogenous regressor and two excluded instruments, equal 19.93 (10% maximal IV size) and 11.59 (15% maximal IV size) (see Stock & Yogo, 2005, table 5.2). H0 is rejected at the 5% significance level for test statistics exceeding the critical values. The Kleibergen-Paap rk Wald F statistic is the simple F statistic of excluded instruments, which is always significant at the 1% significance level.

Table B3. First-stage results and weak identification test statistics – model with $\mathit{\text{ea}}$ interaction term.

Dependent variable: lagged current account balance (${\mathit{\text{cab}}}_{t-1}$)
tax variable ($\mathit{\text{tv}}$):	$\mathit{\text{citr}}$	$\mathit{\text{eatr}}$	$\mathit{\text{emtr}}$
${\mathit{\text{fch}}}_{t-2}$	−0.44***	−0.44***	−0.43***
	(0.07)	(0.07)	(0.07)
${\mathit{\text{gfcf}}}_{t-2}$	−0.49***	−0.48***	−0.47***
	(0.09)	(0.10)	(0.10)
Weak identification tests with H0: instruments are weak^1
Cragg-Donald Wald F statistic	49.40	51.87	53.09
K-P Wald rk F statistic	26.85	27.61	27.88
Dependent variable: lagged balance of trade in goods and services (${\mathit{\text{tbgs}}}_{t-1}$)
tax variable ($\mathit{\text{tv}}$):	$\mathit{\text{citr}}$	$\mathit{\text{eatr}}$	$\mathit{\text{emtr}}$
${\mathit{\text{fch}}}_{t-2}$	−0.39***	−0.39***	−0.39***
	(0.10)	(0.10)	(0.10)
${\mathit{\text{gfcf}}}_{t-2}$	−0.40***	−0.39***	−0.39***
	(0.13)	(0.13)	(0.13)
Weak identification tests with H0: instruments are weak^1
Cragg-Donald Wald F statistic	112.76	118.78	116.83
K-P Wald rk F statistic	55.74	58.48	59.19

Notes: Heteroskedasticity-robust standard errors in parentheses. ***, ** and * denote statistical significance at the 1, 5 and 10% levels, respectively.

¹Critical values for the weak instrument test based on size, with one endogenous regressor and two excluded instruments, equal 19.93 (10% maximal IV size) and 11.59 (15% maximal IV size) (see Stock & Yogo, 2005, table 5.2). H0 is rejected at the 5% significance level for test statistics exceeding the critical values. The Kleibergen-Paap rk Wald F statistic is the simple F statistic of excluded instruments, which is always significant at the 1% significance level.

Table B4. Results of fixed-effects estimations – model with $\mathit{\text{ea}}$ interaction term.

Dependent variable: change in external balance ($\Delta {\mathit{\text{eb}}}_t$)
$\mathit{\text{eb}}:$	$\mathit{\text{cab}}$	$\mathit{\text{cab}}$	$\mathit{\text{cab}}$	$\mathit{\text{tbgs}}$	$\mathit{\text{tbgs}}$	$\mathit{\text{tbgs}}$
$\mathit{\text{tv}}:$	$\mathit{\text{citr}}$	$\mathit{\text{eatr}}$	$\mathit{\text{emtr}}$	$\mathit{\text{citr}}$	$\mathit{\text{eatr}}$	$\mathit{\text{emtr}}$
	(1)	(2)	(3)	(4)	(5)	(6)
${\mathit{\text{eb}}}_{t-1}$	−0.43***	−0.43***	−0.42***	−0.37***	−0.36***	−0.36***
	(0.04)	(0.04)	(0.04)	(0.04)	(0.04)	(0.04)
$\Delta {\mathit{\text{gdpg}}}_t$	−0.03	−0.03	−0.07	0.10*	0.10*	0.06
	(0.06)	(0.06)	(0.06)	(0.05)	(0.05)	(0.06)
${\mathit{\text{gdpg}}}_{t-1}$	−0.17**	−0.16**	−0.19**	−0.12**	−0.10	−0.13*
	(0.08)	(0.08)	(0.08)	(0.07)	(0.07)	(0.07)
$\Delta {\mathit{\text{ur}}}_t$	0.78***	0.82***	0.82***	0.60***	0.65***	0.63***
	(0.12)	(0.13)	(0.13)	(0.11)	(0.12)	(0.12)
${\mathit{\text{ur}}}_{t-1}$	0.23***	0.25***	0.25***	0.13**	0.14**	0.14***
	(0.06)	(0.06)	(0.06)	(0.05)	(0.06)	(0.06)
$\Delta {\mathit{\text{grev}}}_t$	−0.30**	−0.29**	−0.34***	−0.49***	−0.48***	−0.52***
	(0.12)	(0.12)	(0.12)	(0.11)	(0.11)	(0.11)
${\mathit{\text{grev}}}_{t-1}$	−0.01	0.01	0.01	−0.15**	−0.12*	−0.11*
	(0.07)	(0.07)	(0.08)	(0.07)	(0.07)	(0.07)
$\Delta {\mathit{\text{ggb}}}_t$	0.15**	0.15**	0.15**	0.11**	0.11*	0.13**
	(0.06)	(0.06)	(0.06)	(0.06)	(0.06)	(0.06)
${\mathit{\text{ggb}}}_{t-1}$	0.17***	0.18***	0.19***	0.06	0.07	0.08
	(0.06)	(0.06)	(0.06)	(0.06)	(0.06)	(0.06)
$\Delta {\mathit{\text{dep}}}_t$	0.07	0.02	0.22	−0.26	−0.34	−0.13
	(0.41)	(0.42)	(0.42)	(0.38)	(0.39)	(0.39)
${\mathit{\text{dep}}}_{t-1}$	0.24**	0.28**	0.26**	0.22**	0.25**	0.18
	(0.12)	(0.12)	(0.13)	(0.11)	(0.11)	(0.12)
${\mathit{\text{iip}}}_{t-2}$	0.00	0.00	0.00	−0.00	−0.00	−0.00
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.01)
${\mathit{\text{eu}}}_t$	1.37**	1.25*	1.32*	1.15*	1.16*	1.18*
	(0.67)	(0.69)	(0.71)	(0.62)	(0.64)	(0.66)
$\Delta {\mathit{\text{tv}}}_t\times {\mathit{\text{ea}}}_t$	0.11	−0.04	−0.07*	0.11	−0.02	−0.07**
	(0.08)	(0.09)	(0.04)	(0.07)	(0.09)	(0.03)
${\mathit{\text{tv}}}_{t-1}\times {\mathit{\text{ea}}}_t$	0.11**	0.10	0.00	0.17***	0.17***	0.01
	(0.05)	(0.06)	(0.03)	(0.05)	(0.06)	(0.02)
$\Delta {\mathit{\text{tv}}}_t\times {\mathit{\text{non}}-\mathit{\text{ea}}}_t$	0.36**	0.43***	0.28**	0.37***	0.37**	0.07
	(0.14)	(0.16)	(0.14)	(0.13)	(0.15)	(0.13)
${\mathit{\text{tv}}}_{t-1}\times {\mathit{\text{non}}-\mathit{\text{ea}}}_t$	0.11*	0.08	−0.03	0.15***	0.15**	−0.05
	(0.06)	(0.07)	(0.05)	(0.05)	(0.06)	(0.05)
Observations	489	484	478	488	483	477
Adjusted $R^2$	0.35	0.35	0.35	0.34	0.34	0.32

Notes: Heteroskedasticity-robust standard errors in parentheses. ***, ** and * denote statistical significance at the 1, 5 and 10% levels, respectively.

Table B5. Long-term effects of corporate taxation from fixed-effects estimations – model with $\mathit{\text{ea}}$ interaction term.

Dependent variable: change in external balance ($\Delta {\mathit{\text{eb}}}_t$)
$\mathit{\text{eb}}:$	$\mathit{\text{cab}}$	$\mathit{\text{cab}}$	$\mathit{\text{cab}}$
$\mathit{\text{tv}}:$	$\mathit{\text{citr}}$	$\mathit{\text{eatr}}$	$\mathit{\text{emtr}}$
(a) Euro area long-term effect of $\mathit{\text{tv}}$	0.26**	0.24	0.01
(b) Non-euro area long-term effect of $\mathit{\text{tv}}$	0.25*	0.20	−0.07
H0: (a) – (b) = 0; χ^2(1) statistic	0.09	0.39	0.51
$\mathit{\text{eb}}:$	$\mathit{\text{tbgs}}$	$\mathit{\text{tbgs}}$	$\mathit{\text{tbgs}}$
$\mathit{\text{tv}}:$	$\mathit{\text{citr}}$	$\mathit{\text{eatr}}$	$\mathit{\text{emtr}}$
(a) Euro area long-term effect of $\mathit{\text{tv}}$	0.46***	0.46***	0.01
(b) Non-euro area long-term effect of $\mathit{\text{tv}}$	0.42***	0.41**	−0.15
H0: (a) – (b) = 0; χ^2(1) statistic	0.49	0.54	2.08

Note: ***, ** and * denote statistical significance at the 1, 5 and 10% levels, respectively.

Stock, J. H., & Yogo, M. (2005). Testing for weak instruments in linear IV regressions. In D. W. K. Andrews & J. H. Stock (Eds.), Identification and inference for econometric models: Essays in honor of thomas rothenberg (pp. 80–108). Cambridge University Press.

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