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Tax Structure and Economic Growth in Cote dIvoire: Are Some Taxes Better Than Others?

Author

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  • Yaya KEHO

    (Ecole Nationale Supérieure de Statistique et d’Economie Appliquée Côte d’Ivoire)

Abstract

This paper examines the relationships between taxation and output in Côte d’Ivoire during the period 1960-2006. The bounds testing approach to cointegration devised by Pesaran et al. (2001) showed that tax variables, except direct tax, and real GDP are cointegrated and positively related in the long-run. The results of Granger causality tests indicated bidirectional causality between tax revenues and output in the long-run, implying a virtuous circle of tax and GDP. Direct taxes, however, did not cause GDP both in the short and long-run. These findings suggest that i) the tax revenues and, therefore, budget deficit, depend upon the economic activity, and ii) switching the tax burden from direct to indirect taxes is likely to have a positive effect on the economic output.

Suggested Citation

  • Yaya KEHO, 2011. "Tax Structure and Economic Growth in Cote dIvoire: Are Some Taxes Better Than Others?," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 1(4), pages 226-235, December.
  • Handle: RePEc:asi:aeafrj:2011:p:226-235
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    References listed on IDEAS

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    1. repec:pje:journl:article28sumv is not listed on IDEAS
    2. Theodore U. Dickson & Appolos N. Nwaobia, 2012. "Impact of Heavy Taxation on Israel During Solomonic Era: Implications for Nigerian Tax System," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 2(2), pages 337-346, June.

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