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Effect of Indirect Taxes on the Inflation in Turkey

Author

Listed:
  • Adil Akıncı

    (Kırklareli University)

  • Özer Özçelik

    (Kütahya Dumlupinar University)

Abstract

Taxes have financial and non-financial objectives. While revenue generation to ensure the financing of public expenditures basically constitutes the financial objectives of taxes, economic stability, economic growth and development and fair income distribution targets constitute the non-financial objectives of taxes. When economic stability, one of non-financial objectives, is considered, price stability and full employment level come into question. When it comes to price stability, inflation usually comes to the forefront in developing countries. In this context, in the study, the relationship between indirect taxes and inflation during 2006:M1-2018:M5 period in Turkey was analyzed by the ARDL (Autoregressive Distributed Lag Model), which is one of time series analysis methods, and its effectiveness on non-financial objectives of taxes was investigated. As a result of the findings obtained, it has been determined that there is a long-term cointegration relationship between indirect taxes and inflation.

Suggested Citation

  • Adil Akıncı & Özer Özçelik, 2018. "Effect of Indirect Taxes on the Inflation in Turkey," Journal of Finance Letters (Maliye ve Finans Yazıları), Maliye ve Finans Yazıları Yayıncılık Ltd. Şti., vol. 33(110), pages 9-20, October.
    • Handle: RePEc:acc:malfin:v:33:y:2018:i:110:p:9-20
    DOI: https://doi.org/10.33203/mfy.455483
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    More about this item

    Keywords

    Indirect Tax; Inflation; Time Series Analysis; ARDL;
    All these keywords.

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • E69 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Other

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