Tax reforms are often motivated by their potential to improve economic performance. However, their actual impacts are difficult to quantify. We analyze the impact of flat tax reform on incomes using "synthetic control" methods. We identify the eight Eastern and Central European countries that adopted flat tax systems between 1994 and 2005, and then compare post-reform GDP per capita of "treated" countries with a convex combination of similar but "untreated" countries, while accounting for the time-varying impact of unobservable heterogeneity. We find positive impacts in all eight countries, with seven out of eight cases significant at the conventional level.JEL Classification: H20, H25, H31However, demonstrating these effects from actual country experience has proved elusive.This article analyzes the impact of flat tax reform on economic growth using a novel data-driven empirical method, "synthetic control." We identify the eight Eastern and Central

A number of advanced economies carried out a sequence of extensive reforms of their labor and product markets in the 1990s and early 2000s. Using the Synthetic Control Method (SCM), this paper implements six case studies of well-known waves of reforms, those of New Zealand, Australia, Denmark, Ireland and Netherlands in the 1990s, and the labor market reforms in Germany in the early 2000s. In four of the six cases, GDP per capita was higher than in the control group as a result of the reforms. No difference between the treated country and its synthetic counterpart could be found in the cases of Denmark and New Zealand, which in the latter case may have partly reflected the implementation of reforms under particularly weak macroeconomic conditions. Overall, also factoring in the limitations of the SCM in this context, the results are suggestive of a positive but heterogenous effect of reform waves on GDP per capita. JEL Classification Numbers: E02, J08, O40, O43.

Theory predicts that a value‐added tax (VAT) is an efficient tax system, which is one of the primary reasons for its rapid adoption worldwide. However, there is little empirical evidence supporting this prediction, especially for developing countries. I estimate the efficiency gains of introducing a VAT using the synthetic control method. I find that a VAT has, on average, positive and economically meaningful impact on economic efficiency. This result, however, is driven by richer countries only. There is no significant impact of the VAT on poorer countries. The findings are robust across a series of placebo studies and sensitivity checks. (JEL H20, H25, O40, E6)

The proponents of decentralization argue that it improves economic growth, while critics say it increases regional inequality. The empirical evidence is mixed and based mostly on developed countries due to a lack of income data for lower administrative regions. We combine night-lights data captured by satellites with a new database on decentralization derived from actual laws that are institutionalized and circumscribed from a global sample of countries.We then analyze the impact of decentralization on regional convergence using income data from the first and second administrative regions. We find that decentralization hinders within-country regional convergence, especially in the developing countries.

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