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Journals / İstanbul İktisat Dergisi / 2021 / Cilt: 71 - Sayı: 1

Nonlinear Relationship between Economic Growth and Tax Revenue in Turkey: Hidden Cointegration Approach

Türkiye’de Ekonomik Büyüme ile Vergi Geliri Arasındaki Doğrusal Olmayan İlişki: Gizli Eşbütünleşme Yaklaşımı

Gülgün ÇİĞDEM
Merve ALTAYLAR
Pages
21–38
Publication Date
2021-07-16
DOI
—
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AI Summary & Key Takeaways

AI Insight
⚡ TL;DR(Too Long; Didn't Read)

The analysis results demonstrated that the tax revenues decreased across variables and that there was a cointegration relationship in periods when the GDP increased.

📌 3 Key Takeaways

🎯
Objective & Hypothesis:The tax revenues, which constitute the most important income item of the state, provide the necessary financing for sustainable economic growth in evolved countries, development efforts in developing economies, and form the basis of social welfare.
📊
Key Findings & Data:Therefore, the relationship between economic growth and tax revenues is significant and numerous empirical studies have been carried out on this subject.
💡
Conclusion & Impact:The analysis results demonstrated that the tax revenues decreased across variables and that there was a cointegration relationship in periods when the GDP increased.
🔬Design:Modeling & Simulation
📍Scope:2018 Verileri
⚙️Variables:GDP · Taxes · Hidden cointegration

Abstract

The tax revenues, which constitute the most important income item of the state, provide the necessary financing for sustainable economic growth in evolved countries, development efforts in developing economies, and form the basis of social welfare. Therefore, the relationship between economic growth and tax revenues is significant and numerous empirical studies have been carried out on this subject. However, there is no study testing the hidden cointegration. This paper aims to test the presence of hidden cointegration between economic growth and tax revenues and intends to develop further typologies. To test the relationship, data on the ratio of annual tax revenues/GDP between 1985-2018 in Turkey was used, and Hidden Cointegration Approach developed by Granger and Yoon (2002) and crouching error correction model were applied. The analysis results demonstrated that the tax revenues decreased across variables and that there was a cointegration relationship in periods when the GDP increased. This manuscript is a contribution to the literature since a different technique was performed to examine the relationship between growth and tax revenues, and the results obtained will be crucial for decision-makers.

Özet

The tax revenues, which constitute the most important income item of the state, provide the necessary financing for sustainable economic growth in evolved countries, development efforts in developing economies, and form the basis of social welfare. Therefore, the relationship between economic growth and tax revenues is significant and numerous empirical studies have been carried out on this subject. However, there is no study testing the hidden cointegration. This paper aims to test the presence of hidden cointegration between economic growth and tax revenues and intends to develop further typologies. To test the relationship, data on the ratio of annual tax revenues/GDP between 1985-2018 in Turkey was used, and Hidden Cointegration Approach developed by Granger and Yoon (2002) and crouching error correction model were applied. The analysis results demonstrated that the tax revenues decreased across variables and that there was a cointegration relationship in periods when the GDP increased. This manuscript is a contribution to the literature since a different technique was performed to examine the relationship between growth and tax revenues, and the results obtained will be crucial for decision-makers.

🔖

Cite This Article

ÇİĞDEM, G., ALTAYLAR, M. (2021). Nonlinear Relationship between Economic Growth and Tax Revenue in Turkey: Hidden Cointegration Approach. İstanbul İktisat Dergisi, Cilt: 71 - Sayı: 1, 21–38. https://ajindex.com/articles/243916

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References (2)

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