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Does Trade Liberalization Affects International Trade Tax Revenue? Evidence from Dynamic Panel Threshold Method

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  • Mohammad Karimi
  • Shivee Ranjanee Kaliappan
  • Normaz Wana Ismail
  • Hanny Zurina Binti Hamzah

Abstract

This paper examines the relationship between trade liberalization and trade tax revenues applying an advanced dynamic panel threshold technique. The empirical analysis is based on a large panel-dataset including 103 developing countries for the period 1993-2012. The empirical finding results indicate that the relationship between trade liberalization and trade tax revenue is non-liner and also provide evidence of a Laffer effect. In particular, we find that additional trade liberalization has a negative impact on trade tax revenue, but this negative effect will disappear at the higher levels of trade liberalization. The results point to harness the benefits of trade liberalization without having worry a lot about its impact on trade tax revenues.

Suggested Citation

  • Mohammad Karimi & Shivee Ranjanee Kaliappan & Normaz Wana Ismail & Hanny Zurina Binti Hamzah, 2016. "Does Trade Liberalization Affects International Trade Tax Revenue? Evidence from Dynamic Panel Threshold Method," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 75-87.
    • Handle: RePEc:bas:econst:y:2016:i:1:p:75-87
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    More about this item

    JEL classification:

    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods

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