A QUANTITATIVE APPROACH ON THE DIFFUSION OF NEOLIBERAL TAX POLICIES UN THE POST COMMUNIST NEW-EU MEMBER STATES

Within this paper I employ the OLS PCSE analysis to investigate the relationships between the CIT (Corporate Income Tax) and various potential independent variables testing for competing theories within the 10 post communist New EU Member States. Reforms in the area of CIT reforms, events were triggered immediately after the fall of the communist regimes. I test the degree to which four theories of policy diffusion explain the observed patterns. The OLS PCSE analysis reveals that while FDI represented an important variable in triggering CIT cuts, its directionality does not confirm the competitive diffusion theory.