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The Symmetric and Asymmetric Effects of Direct and Indirect Taxes on the Economic Activities

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  • Hüseyin Karamelikli

Abstract

In this study, the effects of direct and indirect taxes on economic activities are being investigated. The relationship between taxes and economic activities is mostly based on symmetric assumptions. Studies that do not involve asymmetric feature of the relationships between macroeconomic variables can lead to the implementation of wrong policies. For this reason, the long-run relationship between indirect taxes and direct taxes and economic activities in this study is examined by using a nonlinear autoregressive distributed lag model (NARDL). Moreover, while the tax increases seemed to have an impact on economic activity, the decline did not seem to have a significant effect. In the short term, the (direct) increase of the tax has a negative effect on the economic activities, whereas the opposite situation occurs in the long run.

Suggested Citation

  • Hüseyin Karamelikli, 2018. "The Symmetric and Asymmetric Effects of Direct and Indirect Taxes on the Economic Activities," Journal of Finance Letters (Maliye ve Finans Yazıları), Maliye ve Finans Yazıları Yayıncılık Ltd. Şti., vol. 33(110), pages 95-110, October.
    • Handle: RePEc:acc:malfin:v:33:y:2018:i:110:p:95-110
    DOI: https://doi.org/10.33203/mfy.372284
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    More about this item

    Keywords

    Direct Tax; Indirect Tax; NARDL; Economic Activities;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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