The Determinants of VAT Introduction: A Spatial Duration Analysis

CentER Discussion Paper Series No. 2012-071

35 Pages Posted: 29 Aug 2012

See all articles by Pavel Cizek

Pavel Cizek

Tilburg University - Department of Econometrics & Operations Research

Jinghua Lei

Tilburg University - Department of Econometrics & Operations Research

Jenny E. Ligthart

Tilburg University - CentER, Department of Economics; University of Groningen - Faculty of Economics and Business; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: August 18, 2012

Abstract

The spatial survival models typically impose frailties, which characterize unobserved heterogeneity, to be spatially correlated. This specification relies highly on a predeterminate covariance structure of the errors. However, the spatial effect may not only exist in the unobserved errors, but it can also be present in the baseline hazards and the dependent variables. A new spatial survival model with these three possible spatial correlation structures is explored and used to investigate the determinants of value-added tax implementation in 92 countries over the period 1970–2008 using the proposed model. The estimation results suggest the presence of a significant copycat effect among neighboring countries for both contiguity and distance weight matrices.

Keywords: Spatial duration, MCMC, Metropolis-Hastings algorithm, Value-Added Tax

JEL Classification: C11, C23, C41, H20, H70

Suggested Citation

Cizek, Pavel and Lei, Jinghua and Ligthart, Jenny E., The Determinants of VAT Introduction: A Spatial Duration Analysis (August 18, 2012). CentER Discussion Paper Series No. 2012-071. Available at SSRN: https://ssrn.com/abstract=2138191 or http://dx.doi.org/10.2139/ssrn.2138191

Pavel Cizek (Contact Author)

Tilburg University - Department of Econometrics & Operations Research ( email )

Tilburg, 5000 LE
Netherlands

Jinghua Lei

Tilburg University - Department of Econometrics & Operations Research ( email )

Tilburg, 5000 LE
Netherlands

Jenny E. Ligthart

Tilburg University - CentER, Department of Economics ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 8755 (Phone)
+31 13 466 4032 (Fax)

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
9700 AB Groningen
Netherlands

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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