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Long-Run Nexus between Tax Revenue on Economic Performance: Empirical Evidence from Malaysia

Author

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  • Roshaiza Taha

    (Universiti Malaysia Terengganu, Malaysia)

  • Nanthakumar Loganathan

Abstract

Taxation is main source of government income and has direct linkages with economic performance for most of countries. This study attempts to investigate the long-run nexus between economic performance and tax revenue for Malaysia as a developing nation with dynamic economic progress for the last 2 decades. To determine the long-run nexus, we used the structural breaks effects with the conjunction of ARDL cointegration analysis along with causality analysis. The empirical finding successfully captures the long-run nexus between economic performance and tax revenue. Meanwhile, in the causality analysis section, we found that there is bidirectional causality running between economic performance and tax revenue for Malaysia, which indicates that both variables are cause each another to achieve long-run sustainability stage. The study opens up new directions for policy makers to improve performance of tax sector for sustainable economic growth.

Suggested Citation

  • Roshaiza Taha & Nanthakumar Loganathan, 2014. "Long-Run Nexus between Tax Revenue on Economic Performance: Empirical Evidence from Malaysia," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 2(6), pages 238-245, June.
    • Handle: RePEc:ijr:journl:v:2:y:2014:i:6:p:238-245
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    References listed on IDEAS

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    1. Sami Saafi & Meriem Bel Haj Mohamed & Abdeljelil Farhat, 2017. "Untangling the causal relationship between tax burden distribution and economic growth in 23 OECD countries: Fresh evidence from linear and non-linear Granger causality," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 14(2), pages 265-301, December.

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    More about this item

    Keywords

    Economic performance; Tax revenue; Causality;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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