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Tax Revenue and Economic Growth in Ghana: A Cointegration Approach

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  • Takumah, Wisdom

Abstract

This study examines the effect of tax revenue on economic growth in Ghana using quarterly data for the period 1986 to 2010 within the VAR framework. The study found that there exist both short run and long run relationship between economic growth and tax revenue. The result indicated a unidirectional causality between tax revenue and economic growth and it flows from tax revenue to economic growth. The result suggests that tax revenue exerted a positive and statistically significant effect on economic growth both in the long-run and short-run implying that tax revenue enhances economic growth in Ghana. The study recommended that the tax base need to be widened and the tax rates reduced in order to generate more revenue. It was recommended that the government should improve tax collection measures in order to generate more revenue so as to increase economic growth in Ghana.

Suggested Citation

  • Takumah, Wisdom, 2014. "Tax Revenue and Economic Growth in Ghana: A Cointegration Approach," MPRA Paper 58532, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:58532
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    Cited by:

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    2. Olise, Charles Nnamdi & Emeh, Ikechukwu Eke, 2020. "Interrogating the Impact of Voluntary Asset and Income Declaration Scheme (VAIDS) on Tax Administration in Nigeria," Journal of Public Administration and Governance, Macrothink Institute, vol. 10(3), pages 3852-3852, December.
    3. Andre Gbato, 2017. "Impact of Taxation on Growth in Sub-Saharan Africa: New Evidence Based on a New Data Set," Post-Print hal-01673738, HAL.
    4. Ekpeyong, Paul & Adewoyin, David, 2023. "Financial development, taxation and economic growth in sub-sahara africa," MPRA Paper 117739, University Library of Munich, Germany.
    5. Sayef Bakaria, 2019. "If France Continues This Strategy, Taxes Will Destroy Domestic Investment And Economic Growth," Journal of Smart Economic Growth, , vol. 4(1), pages 31-45, Mars.
    6. Andre Gbato, 2017. "Impact of Taxation on Growth in Sub-Saharan Africa: New Evidence Based on a New Data Set," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(11), pages 173-193, November.
    7. Richard Adeleke & Tolulope Osayomi & Toluwanimi Adeoti, 2021. "Does sub‐national government revenue have an effect on socio‐economic and infrastructural development in Nigeria? A geographical analysis," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(5), pages 1603-1614, October.
    8. 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

    Tax revenue; Economic Growth; Cointegration; Causality; Ghana;
    All these keywords.

    JEL classification:

    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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