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GDP and Tax Revenues-Causality Relationship in Developing Countries: Evidence from Palestine

Author

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  • Raed A. M. Iriqat
  • Ahmad N. H. Anabtawi

Abstract

The study aims to investigate the causality relationship between Gross Domestic Product and its components with Tax revenues in developing countries as a case study in Palestine. This study based on an empirical approach using secondary data from Palestine monetary Authority during (1999-2014). The findings exposed mainly that the tax revenues does not Granger Cause each of the Palestinian Gross Domestic Product, Government spending, Consumption, Investment and Balance of trade. In addition, researcher divided period of study into three stages according to changing in income tax act. Moreover, results shows that the impact of macro-economic variables on tax revenues and correlations between dependent and independent variables was changing from one stage to other. This paper concludes that the Palestinian authority should motivate investment conditions and improve the tax collection instruments and decrease the tax invasion. In addition, Palestinian government should rationalize the government consumption spending and increase the government expenditure for the development.

Suggested Citation

  • Raed A. M. Iriqat & Ahmad N. H. Anabtawi, 2016. "GDP and Tax Revenues-Causality Relationship in Developing Countries: Evidence from Palestine," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(4), pages 54-62, April.
    • Handle: RePEc:ibn:ijefaa:v:8:y:2016:i:4:p:54-62
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    tax revenues; gross domestic product; government spending; consumption; investment and balance;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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