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Tax control variable for a regression?
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3/24/2015 5:25:26 PM
Posted: 1 year ago
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Can anyone explain to me what this sentence means econometrically? I mean what I am supposed to do in order to conclude to one control variable (time series). 'The progressivity measures are obtained by regressing marginal (or average) rates on gross income using 100 data points that are formed around a country"s GDP per capita in a given year. The slope coefficient on the income variable measures the percentage point change in the tax rate resulting from a one percentage point change in pre-tax income14 and is our measure of structural progressivity.' I dont get what I am supposed to do after I regress the marginal or average taxes (dependent variable) ..The independent variable is GDP per capita? And which is the final number that I will use in order to incorporate 'progressivity measures' in my final equation , as an independent variable?