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An Empirical Study on the Determinants of Government Revenue in Nepal

Author

Listed:
  • Yam Lal Bhoosal

    (Ministry of Women Children and Senior Citizen, Government of Nepal)

  • Rohan Byanjankar

    (Nepal Rastra Bank)

Abstract

This paper aims to examine the determinants of government revenue in Nepal. The macroeconomic variables, namely, GDP per capita, imports, consumer price index, exchange rate, and foreign aid from 1975 to 2021 have been included to assess their effect on government revenue. We have performed descriptive and econometric analyses. Government revenue increased by about 15 percent on average from 1976 to 2021 and the revenue-to-GDP ratio stood at around 22 percent in 2021. The empirical results reveal that GDP per capita and imports are the major determinants of government revenue in the short run. Likewise, GDP per capita, imports, and exchange rate are the major determinants of government revenue in the long-run. The error correction term suggests that the short-run disequilibrium in the system takes about 3 years to converge to equilibrium.

Suggested Citation

  • Yam Lal Bhoosal & Rohan Byanjankar, 2022. "An Empirical Study on the Determinants of Government Revenue in Nepal," NRB Economic Review, Nepal Rastra Bank, Economic Research Department, vol. 34(2), pages 30-49, October.
    • Handle: RePEc:nrb:journl:v:34:y:2022:i:2:p:30
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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