IDEAS home Printed from https://ideas.repec.org/a/ids/gbusec/v21y2019i2p246-265.html
   My bibliography  Save this article

Optimal tax revenues and economic growth in transition economies: a threshold regression approach

Author

Listed:
  • Celil Aydin
  • Ömer Esen

Abstract

The purpose of this article is to explore the impact of tax revenue as a share of GDP on economic growth in transition economies. The article uses a dynamic panel threshold model to examine the nonlinear relationship between tax revenue and economic growth of 11 central and south-eastern European and Baltic countries during the transition process between 1995 and 2014. The results suggest that the optimal level of tax revenue for maximising economic growth is approximately 18.00% of GDP for full transition economies, 18.50% for developing economies and 23.00% for developed economies. The findings indicate that tax revenues as a share of GDP above the threshold level adversely affect economic growth whereas a tax revenue rate below the threshold positively affects growth. The results of the current study reveal that tax sizes representing the share of the government in the economy have an optimal level.

Suggested Citation

  • Celil Aydin & Ömer Esen, 2019. "Optimal tax revenues and economic growth in transition economies: a threshold regression approach," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 21(2), pages 246-265.
    • Handle: RePEc:ids:gbusec:v:21:y:2019:i:2:p:246-265
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=98091
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mkadmi, Jamel Eddine & Bakari, Sayef & Othmani, Ameni, 2021. "The Impact of Tax Revenues and Domestic Investments on Economic Growth in Tunisia," MPRA Paper 108387, University Library of Munich, Germany.
    2. Temel Gurdal & Mucahit Aydin & Veysel Inal, 2021. "The relationship between tax revenue, government expenditure, and economic growth in G7 countries: new evidence from time and frequency domain approaches," Economic Change and Restructuring, Springer, vol. 54(2), pages 305-337, May.
    3. Dramane, Abdoulaye, 2022. "The Nexus between Military Spending, Tax Revenues and Economic Growth in the G5 Sahel Countries," African Journal of Economic Review, African Journal of Economic Review, vol. 10(2), March.
    4. Yusuf Shamsuddeen Nadabo & Suleiman Maigari Salisu, 2021. "Investigating the Expenditure-Economic Growth Nexus in Nigeria the Presence of Structural Breaks: A Nonlinear ARDL Cointegration Approach," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 5(09), pages 146-153, September.
    5. Lucas Menescal & José Alves, 2022. "Optimal Threshold Taxation: An Empirical Investigation for Developing Economies," CESifo Working Paper Series 9782, CESifo.
    6. Arvin, Mak B. & Pradhan, Rudra P. & Nair, Mahendhiran S., 2021. "Are there links between institutional quality, government expenditure, tax revenue and economic growth? Evidence from low-income and lower middle-income countries," Economic Analysis and Policy, Elsevier, vol. 70(C), pages 468-489.
    7. Channew Maneerat & Snober Fazal, 2020. "The Influence of Tax Revenue, Government Expenditures, Fiscal Decentralization, Carbon Emission and Exports on Economic Growth of Developing Countries," iRASD Journal of Economics, International Research Alliance for Sustainable Development (iRASD), vol. 1(2), pages 1-12, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:gbusec:v:21:y:2019:i:2:p:246-265. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=168 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.