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A VAR Analysis of the Connection between Taxation and Economic Growth. Case Study: Romania

Author

Listed:
  • Moraru Camelia

    (Academy of Economic Studies, Bucharest)

  • Popovici Norina

    („Ovidius” University, Faculty of Economic Sciences, Constanta)

  • Ioni?ã Roxana

    ("Dimitrie Cantemir" Christian University, Constanta)

Abstract

How can changes in the tax level influence economic activity? The simple correlation between taxation and economic activity has shown that when economic activity increases faster, then tax revenues grow more quickly, but this correlation does not reflect the positive effect of increased taxes on production. A number of studies that have examined the effects of taxes on economic growth and most of them have shown negative effects of taxation on economic growth. This paper examines the relationship between taxation, expressed as a share of tax revenues in GDP and growth, expressed as the rate of real GDP growth in Romania, during 2006-2012, using the VAR model.

Suggested Citation

  • Moraru Camelia & Popovici Norina & Ioni?ã Roxana, 2015. "A VAR Analysis of the Connection between Taxation and Economic Growth. Case Study: Romania," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 831-835, May.
    • Handle: RePEc:ovi:oviste:v:xv:y:2015:i:1:p:831-835
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    More about this item

    Keywords

    economic growth; fiscal policy; taxation; VAR analysis;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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