Public debt, budget deficit and tax policy reforms for fiscal consolidation in Sri Lanka: rationale and feasibility

Vinayagathasan, Thanabalasingam; Ranjith, J. G. Sri

doi:10.4038/sljss.v44i1.7953

Cited by 7 publications

(11 citation statements)

References 2 publications

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“…The cointegration results are consistent with prior expectations and other studies' findings that examined public debt, budget deficit, and tax policy reforms for fiscal consolidation in Sri Lanka [10]. In their study [10], they found a positive and statistically significant relationship between public debt and taxation. Additionally, other studies analyzed the relationship between taxation and inflation in Nigeria [9].…”

Section: Findings and Discussionsupporting

confidence: 90%

“…There was an examination of public debt, budget deficit, and tax policy reforms for fiscal consolidation in Sri Lanka that employed the Vector Error Correction model (VECM) [10]. It was revealed that direct government tax revenue, indirect tax revenue, and consumer price index are negatively correlated with government debt to GDP ratio in the long run.…”

Section: Empirical Literaturementioning

confidence: 99%

“…It was revealed that direct government tax revenue, indirect tax revenue, and consumer price index are negatively correlated with government debt to GDP ratio in the long run. In the short run, only direct tax revenue affects it significantly [10]. In addition, there was an examination of the effects of tax policy on inflation in Nigeria, employing Johansen cointegration test technique [24].…”

Section: Empirical Literaturementioning

confidence: 99%

“…Many scholars utilized Granger Causality tests to reveal the direction of causality in the relations between taxation, public debt, and expected inflation [10,[26][27][28][29][30]. It was revealed that a unidirectional causality relationship exists between tax revenue and public debt [10,26]. However, few studies revealed that there is a unidirectional causality running from inflation to taxation [27,28].…”

Section: Empirical Literaturementioning

confidence: 99%

“…For example, a study by [7] attempted to study the relationship between public debt, economic growth, and inflation based on data among BRICS countries. Based on the literature reviewed in this study, most studies around the world only focused on the relationship between inflation and public debt, which are the explanatory variables in this study [8][9][10]. From the literature review, it appears that there is a lack of studies about the effects of inflation expectations and public debt on taxation in South Africa.…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

The Impact of Inflation Expectations and Public Debt on Taxation in South Africa

Ncanywa¹,

Setati²

2023

Econometrics - Recent Advances and Applications

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The study investigates the impact of inflation expectations and public debt on taxation in South Africa, employing the autoregressive distributive lag model and Granger Causality techniques. The results indicate a long-run positive significant relationship between inflation expectations and taxation and a negative significant relationship between public debt and taxation. This reveals that when consumers and businesses expect the inflation rate to rise, taxable income will also increase. The public debt-taxation nexus can imply that the South African government finances its debts through borrowing than through taxation. Therefore, economic participants must have full knowledge of what can influence taxation.

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Section: Findings and Discussionsupporting

confidence: 90%

Section: Empirical Literaturementioning

confidence: 99%

Section: Empirical Literaturementioning

confidence: 99%

Section: Empirical Literaturementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

The Impact of Inflation Expectations and Public Debt on Taxation in South Africa

Ncanywa¹,

Setati²

2023

Econometrics - Recent Advances and Applications

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Budget Deficit Financing and Macroeconomic Outcomes: New Evidence from a VARX Model for the Iranian Economy

Bayat,

Qelich,

Amiri

2023

Vision: The Journal of Business Perspective

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The main goal of the study is to evaluate the impacts of different government deficit financing strategies on GDP growth and inflation in the oil-rich nation of Iran from 1990:1 to 2018:4. The link between the government’s budget deficit and GDP growth is examined using the Explanatory-Augmented Vector Autoregressive (VARX) model. Because of the presence of unmodelled variables in the research, the VARX model was applied. The results of the study indicate that the way that the government finances the budget deficit had a direct impact on GDP growth, such that when the Foreign Exchange Reserve Account (FERA) is for most of the financing, the budget deficit’s impact on GDP growth is positive and its severity is increasing. Although the government’s budget deficit has a positive impact on GDP growth, it becomes less severe when most of the financing is obtained through the Selling Government-Owned Companies (SGOC), and when the sale of Debt Securities (DS) is for most of the financing, the impact of the government’s deficit on GDP growth is positive. The study concludes that there is an insignificant effect of a government’s budget deficit on inflation when most of the deficit is covered by withdrawals from the foreign exchange reserve account. However, the budget deficit has raised inflation when the two other sources of funding have gotten most of the funding. One of the study’s innovations is its investigation of the ways used to finance the government’s budget deficit in oil economies, especially Iran. The use of a VARX model to analyse the impact of the government’s budget deficit on macroeconomic indicators and the severity of that impact is another novel aspect of this research. In the Iranian economy, there is no proper statistical information available about the spending of the budget deficit (especially after 2009). This article concludes with a clear message to policymakers: if the government tends to reduce the share of oil income in financing the budget deficit, increasing the share of debt securities is the best alternative.

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Evaluating the Efficacy of Monetary Policy in Driving Economic Growth in Turkey

Louis-Jacques,

2023

JEFAS

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This paper examines the efficacy of monetary policy in fostering output growth in Turkey by analyzing annual time-series data sourced from the Central Bank of the Republic of Turkey (CBRT) spanning from 2005 to 2023. The research employs the Autoregressive Distributed Lag (ARDL) bounds testing procedure. The findings reveal that money supply, considered an indicator of monetary policy in the context of this study, exerts a positive and statistically significant influence on output growth in Turkey in both the short and long term. Additionally, government expenditure has a positive and statistically significant impact on growth in the long term, albeit weaker than the impact of money supply. Lastly, in the long term, inflation negatively affects growth, with statistical significance observed at the 10% level.

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Public debt, budget deficit and tax policy reforms for fiscal consolidation in Sri Lanka: rationale and feasibility

Cited by 7 publications

References 2 publications

The Impact of Inflation Expectations and Public Debt on Taxation in South Africa

The Impact of Inflation Expectations and Public Debt on Taxation in South Africa

Budget Deficit Financing and Macroeconomic Outcomes: New Evidence from a VARX Model for the Iranian Economy

Evaluating the Efficacy of Monetary Policy in Driving Economic Growth in Turkey

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