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The Effect of Democracy and Openness on Tax Revenues: Panel Regression Analysis for OECD Countries (1980-2018)

Author

Listed:
  • Ahmet ÅžAHBAZ
  • Åžerife KOÇ
  • AyÅŸe CEYLAN

Abstract

Tax revenues are the type of revenue that has the highest share in the public revenues of countries. In addition, it is one of the tools of the fiscal policy applied in economic crises. The fact that countries have a democratic or autocratic structure is one of the factors affecting the level of tax revenues. In this study, it is aimed to analyze the relationship between democracy and openness rates and tax revenues for the period covering the years 1980-2018 for 24 OECD countries. In the model, the ratio of tax revenues to GDP (tax burden) as the dependent variable and the democracy and openness ratio indicators are estimated using the Driscoll-Kraay Estimator as the independent variables. As a result of the study, it was concluded that the level of democracy and the trade openness ratio have a positive effect on the tax burden. Therefore, developing democracy and supporting foreign trade have a positive effect on tax revenues.

Suggested Citation

  • Ahmet ÅžAHBAZ & Åžerife KOÇ & AyÅŸe CEYLAN, 2022. "The Effect of Democracy and Openness on Tax Revenues: Panel Regression Analysis for OECD Countries (1980-2018)," Fiscaoeconomia, Tubitak Ulakbim JournalPark (Dergipark), issue 3.
    • Handle: RePEc:fis:journl:220320
    DOI: 10.25295/fsecon.1097399
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    Keywords

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    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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