IESET.
Hypotheses·fiscal·redistribution_tax_private_investment_drag_panel

In country-year panels since 1996, higher tax revenue as a share of GDP predicts lower private investment as a share of GDP after country and year fixed effects, income-level controls, demographics, trade openness, and rule-of-law controls.

The mechanism tested is not that every tax-funded public good is harmful, but that redistribution financed by broad tax extraction reduces retained earnings, expected after-tax returns, and investable cash flow relative to a market-led growth path.

REFUTEDengine/runs/redistribution_tax_private_investment_drag_panel

REFUTED — coef=+0.5889 (sign opposite claim -), p=0.00012

confidence cueThis test cuts against the claim as written or misses its pre-declared threshold.

policy briefNeeds review

In ordinary language

Over a long period, do more market-oriented institutions translate into higher income or productivity, once the comparison looks beyond a single success story?

plain answer

The data did not support the prediction. coef=+0.5889 (sign opposite claim -), p=0.00012

why it matters

This matters because fiscal claims should change belief only when they survive a pre-declared empirical test.

how the test works

It compares 53 country or place units from 1996 to 2023, using a panel fe design, with fixed effects for country and year.

what was measured
What changed
  • Tax revenue share
What we checked
  • Private investment share
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/redistribution_tax_private_investment_drag_panel
1007550250199620102023ARGAUSAUTBELBRACANCHE
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show private_investment_share across 53 sampled countries over 1996–2023.
The shapes above are stylised — none of the lines are real data.
Placeholder for redistribution_tax_private_investment_drag_panel. Published chart will be generated from engine/runs/redistribution_tax_private_investment_drag_panel/chart_data.json.

Pre-registration

pre-registered
first-spec commit e29141a · 2026-05-22T17:36:53Z
run generated · 2026-06-29T17:52:33Z

In country-year panels since 1996, higher tax revenue as a share of GDP predicts lower private investment as a share of GDP after country and year fixed effects, income-level controls, demographics, trade openness, and rule-of-law controls. The mechanism tested is not that every tax-funded public good is harmful, but that redistribution financed by broad tax extraction reduces retained earnings, expected after-tax returns, and investable cash flow relative to a market-led growth path.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

Supported if the coefficient on tax_revenue_share is negative at p <= 0.10 in the baseline and remains negative in the three-year lag specification. Refuted if the baseline coefficient is positive at p <= 0.10, or if the lag specification is positive at p <= 0.10. Otherwise the result is partial or inconclusive.

formal test & threshold
test:      panel_fe_tax_revenue_private_investment_drag
threshold: [object Object]

Method

Template
panel_fe
Fixed effects
country, year
Clustering
country
Sample
53 countries · 1996 – 2023
Evidence type
associational

Two-way fixed-effects panel. Report the contemporaneous coefficient and a three-year lag specification to reduce reverse-causality from recessions raising tax ratios mechanically. The result is associational unless a later tax reform event-study is registered.

Data

VariableSourceTransform
private_investment_share
outcome
world_bank_wdi:NE.GDI.FPRV.ZStier 2
level
tax_revenue_share
treatment
world_bank_wdi:GC.TAX.TOTL.GD.ZStier 2
level
log_gdp_per_capita_ppp
control
world_bank_wdi:NY.GDP.PCAP.PP.KDtier 2
log
population_growth
control
world_bank_wdi:SP.POP.GROWtier 2
level
trade_openness
control
world_bank_wdi:NE.TRD.GNFS.ZStier 2
level
rule_of_law
control
wgi:RL.ESTtier 4
level
inflation
control
world_bank_wdi:FP.CPI.TOTL.ZGtier 2
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — redistribution_tax_private_investment_drag_panel

Verdict: REFUTED — coef=+0.5889 (sign opposite claim -), p=0.00012

Pre-registration

  • Claim: In country-year panels since 1996, higher tax revenue as a share of GDP predicts lower private investment as a share of GDP after country and year fixed effects, income-level controls, demographics, trade openness, and rule-of-law controls. The mechanism tested is not that every tax-funded public good is harmful, but that redistribution financed by broad tax extraction reduces retained earnings, expected after-tax returns, and investable cash flow relative to a market-led growth path.
  • Falsification rule: Supported if the coefficient on tax_revenue_share is negative at p <= 0.10 in the baseline and remains negative in the three-year lag specification. Refuted if the baseline coefficient is positive at p <= 0.10, or if the lag specification is positive at p <= 0.10. Otherwise the result is partial or inconclusive.
  • Falsification test: panel_fe_tax_revenue_private_investment_drag

Estimate

  • Method: linearmodels.PanelOLS
  • Coefficient (treatment): +0.5889
  • Std error: 0.15
  • p-value: 0.00012
  • Observations: 241, countries: 12
  • Within R²: 0.0337
  • Fixed effects: entity=True, time=True
  • Clustering: country

Variables resolved

  • world_bank_wdi:NE.GDI.FPRV.ZS → private_investment_share (outcome, publisher=world_bank_wdi, n=3304)
  • world_bank_wdi:GC.TAX.TOTL.GD.ZS → tax_revenue_share (treatment, publisher=world_bank_wdi, n=4787)
  • world_bank_wdi:NY.GDP.PCAP.PP.KD → log_gdp_per_capita_ppp (controls, publisher=world_bank_wdi, n=8325)
  • world_bank_wdi:SP.POP.GROW → population_growth (controls, publisher=world_bank_wdi, n=16672)
  • world_bank_wdi:NE.TRD.GNFS.ZS → trade_openness (controls, publisher=world_bank_wdi, n=10714)
  • wgi:RL.EST → rule_of_law (controls, publisher=wgi, n=5296)
  • world_bank_wdi:FP.CPI.TOTL.ZG → inflation (controls, publisher=world_bank_wdi, n=7550)

Generated by scripts/run_panel_fe.py at 2026-06-29T17:52:33+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

Mechanism-targeted test for redistribution-heavy claims: it asks whether the financing side of redistribution reduces private investment before making any welfare claim about the spending side.

Authored framework. Read the transparency note.