The relationship between tax revenue, government expenditure, and economic growth in G7 countries: new evidence from time and frequency domain approaches

Gürdal, Temel; Aydın, Mücahit; İnal, Veysel

doi:10.1007/s10644-020-09280-x

Cited by 68 publications

(50 citation statements)

References 56 publications

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“…This is subject to mutual trust between the government and taxpayers, by proving to them that the taxes they pay go to improve their quality of life and that they are used efficiently, which strengthens the motivation for commitment of taxpayers and thus increases tax revenues. This finding is consistent with a finding of (Amoh and Adom, (2017); Gurdal et al, (2020).…”

Section: Ardl Long Run Resultssupporting

confidence: 94%

“…Some of these studies; Teref and Teera (2018); Castro and Camarillo (2014);Jaffri, et al, (2015); Amoh and Adom (2017); Gupta (2007); Ayenew (2016); and the results of previous studies were mixed due to the characteristics of countries and the time period of the samples. Gurdal, et al, (2020). Tested the causal relationship between (TXR), economic growth, and government spending for the seven great countries for the period 1980-2016 and concluded that there is a bidirectional causal relationship between economic growth and (TXR) and a unidirectional causal relationship between (TXR) and government spending in the Seven Great Countries.…”

Section: Literature Reviewmentioning

confidence: 99%

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The Determinants of Tax Revenues: Empirical Evidence From Jordan

Al-Qudah¹

2021

IJFR

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The purpose of this study is to identify the determinants of tax revenues (TXR) in Jordan. The study covered the period (1990-2019) and used ARDL Bound test for co-integration, ARDL Long Run form, and ARDL Error Correction regression to examine the study hypotheses. The results of the bound test and co-integration equation (CointEq1) shows that there exists a long run relationship between (INDUST, LPCI, FD, FAID, GE, OPEN) and (TXR) in Jordan. The analysis results revealed that per capita GDP, fiscal deficit and government expenditure have a positive significant impact on tax revenues in the short run and long run. While, Foreign aids has a negative significant impact on tax revenues. Industrial sector Value added and economic openness have a positive significant impact in the short run while having a positive insignificant impact on tax revenues in the long run. The results explore that per capita GDP, fiscal deficit, foreign aids and government expenditure are good determinants for tax revenues in the short run as well as in the long run, while industrial sector value added and economic openness are good determinants in the short run. The findings suggest a reduction in government expenditure due to the upward trend in the fiscal deficit and public debt, and the continued increase in (GE) leading to more internal and external imbalances.

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Section: Ardl Long Run Resultssupporting

confidence: 94%

Section: Literature Reviewmentioning

confidence: 99%

The Determinants of Tax Revenues: Empirical Evidence From Jordan

Al-Qudah¹

2021

IJFR

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“…The upward trend in government expenditures for economic growth, which has been seen in most countries and has become commonplace in recent years, also requires financing for these expenditures. The most important sources are taxes and debt, but because debt also brings additional costs, it ranks after taxes in order of preference (Gurdal et al, 2020;Van et al, 2020). In addition, the BARS curve is a theoretical foundation that focuses on the non-linear effects of government size on economic growth, thus giving clues for nonlinear effects of tax revenue.…”

Section: H1mentioning

confidence: 99%

The Impacts of Tax Revenue and Investment on the Economic Growth in Southeast Asian Countries

Nguyen

Darsono

2022

JAI

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Research aims: This study focuses on the correlation between tax revenue, investment, and economic growth, taking into account the non-linear effects of tax revenue.Design/Methodology/Approach: Macro data of nine countries in ASEAN (including Brunei, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, and Vietnam) in 2000 - 2020 were extracted from the World Bank database. This research employed panel data estimations.Research findings: This study found statistical evidence of a negative effect of tax revenue on economic growth. However, when considering the non-linear effects of tax revenue, the empirical findings showed that higher tax revenue could reduce the disadvantages of tax impacts to boost economic growth. The negative effect of taxes is as obvious as the economic growth theories, but it depends on the taxation revenue. Lower tax revenue may encourage saving and investment, but it also leads to an increased government deficit, reducing economic growth through government debt, spending and investment. Moreover, this study provides consistent evidence of investment’s positive effect on economic growth in ASEAN countries during the research period.Theoretical contribution/Originality: The theoretical contribution provides evidence on the direct effect of tax revenue and investment on economic growth with a broader understanding of the tax’s non-linear effects and investment contributions in the ASEAN. The study confirms the vital role of government activity in regulating the development of the economy through taxation and investment. Practitioner/Policy implication: The severe impact of the COVID-19 pandemic has increased macroeconomic uncertainties, including uncertainty over savings, investment, and spending, potentially leading to tax revenue and investment losses. It, in turn, affects economic activities, so it requires careful consideration. Learned lessons from this study can prepare for future economic shocks and financial crises to reduce negative impacts on economic growth, including their adverse tax revenue effects.Research limitation: This study is limited by looking at the tax revenue ratio overview, which ignores the tax structure due to the lack of data collection. The following studies need to clarify the tax structure of ASEAN countries to determine which tax gives a negative impact/and which tax has a positive effect on economic growth.

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“…However, a positive impact was obtained for VAT and peaceful environment. Gurdal, et al, (2020) conducted a study to examine the causality between tax revenue and its determinants for the period 1980 to 2006 using seven great countries. The findings revealed a uni-directional causality from economic growth to tax revenue.…”

Section: Literature Reviewmentioning

confidence: 99%

Determinants of Tax Revenue in Sierra Leone: Application of the ARDL Framework

Tarawalie

HEMORE

2021

JEMS

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The aim of this paper is to investigate the determinants of tax revenue in Sierra Leone, over the period 1990Q1 to 2020Q1, within the context of the ARDL estimation procedure. The result from the ARDL Bound test for cointegration suggests that a long-run relationship exists among the variables. The long run analysis indicates that real GDP (Y), openness (Op) and official development assistance (ODA) are the main determinants of tax revenue (TR) in Sierra Leone, with positive coefficients. This result is in tandem with the short run findings, which establishes a positive relationship between tax revenue and its regressors- real GDP and openness. However, the short run result also suggests that inflation has a negative impact on tax revenue. The findings confirm that any short-run disequilibrium to the long-run can be corrected at the 11 percent speed of adjustment quarterly, albeit at a low speed of adjustment. The diagnostic result shows that approximately 75 percent of the variation in the dependent variable is explained by the regressors based on the value of the R-squared. It also confirms that the model is free of serial correlation and heteroscedasticity, whilst the CUSUM test indicates stability of the model coefficients. The policy implication is for government to pursue policies that will enhance economic growth, through investment in growth enhancing sectors including agriculture, health, education, energy and infrastructure development; and ensure a politically stable environment as a recipe for private sector investment.

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The relationship between tax revenue, government expenditure, and economic growth in G7 countries: new evidence from time and frequency domain approaches

Cited by 68 publications

References 56 publications

The Determinants of Tax Revenues: Empirical Evidence From Jordan

The Determinants of Tax Revenues: Empirical Evidence From Jordan

The Impacts of Tax Revenue and Investment on the Economic Growth in Southeast Asian Countries

Determinants of Tax Revenue in Sierra Leone: Application of the ARDL Framework

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