Journal of Economic Development
Vol. 24(3) , July 2017, Page 04-26


Tax revenue, expenditure, and economic growth: An analysis of long-run relationships
Nguyen Phuong Lien & Su Dinh Thanh

DOI: 10.24311/jed/2017.24.3.02
Abstract
Focusing on the investigation of “long-term” relationship between tax revenue, expenditure, and economic growth, this paper employs the Granger causality test and finds that the linkage between tax revenue and spending is a bi-directional causal correlation. Furthermore, applying Persyn and Westerlund’s (2008) co-integration test allows for corroboration of existence of long-run cointegration linkages among outcome of economy and the three variables. In addition, by adopting two-step system generalized method of moments (SGMM) for a dynamic panel of 82 developed and developing countries during 16-year period (2000–2015), this research demonstrates that the impact of tax revenue and spending is substantial and ambiguous, depending on different groups of economies.

Keywords
Long-Term Economic Growth; Co-Integration Test; Tax Revenue And Expenditure.
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