The relationship between the corporate tax and the expanding fiscal policy: The economic and fiscal growth analysis of Turkey and OECD countries

The purpose of this study is to investigate the relationship between Corporate Tax and Economic Growth. Within the scope of this thesis, fiscal policy's development process, aims, instruments, and principles were mentioned. Information about the development process and theory of corporate tax was given and its rate and centage in total tax revenue in OECD countries were analyzed. Economic growth models and the relationship between corporate tax and economic growth were examined. In the third part of this study, by using the data of Turkey and OECD countries' economies between 2002 and 2016, random coefficients regression analysis was made by means of respectively cross sectional dependency test, unit root test (Pesaran(2007)) and lastly Swamy (1970) model. The results were analyzed separately for each country according to convergence hypothesis and a comparison between OECD countries and Turkey was made. According to the results, it has been established that in Turkey, 1% increase in corporate tax revenue enhanced the fluctuation in economic growth by %0,12 and 1% increase in economic growth enhanced the fluctuation in corporate tax by 1,67. OECD countries, 1% increase in corporate tax revenue enhanced the fluctuation in economic growth by percentage between 0,04 and 0,17 and 1% increase in economic growth enhanced the fluctuation in corporate tax by percentage between 1,15 and 5,38. Keywords: Fiscal Policy, Tax Policy, Turkey, OECD, Economic Growth, Corporate Tax, Panel Data Analysis, Unit Root, Cross Sectional Dependency, Random Coefficients Regression Analysis