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The impact of direct and indirect taxes on economic growth: An empirical analysis related to Romania

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  • Bâzgan Ramona - Mihaela

    (The Bucharest University of Economic Studies, Bucharest, Romania)

Abstract

The purpose of this paper involved studying the impact of direct taxes and indirect taxes on the economic growth using an econometric Vector Autoregressive model (VAR) based on the statistical data related to Romania over the period of time 2009 (2nd quarter)-2017 (2nd quarter). Fiscal policy system involved a significant impact on the evolution of economic growth in the recent years in Romania, namely the years taken into consideration for this study. The econometric model used three endogenous variables, namely the level of direct taxes as percent of the Gross Domestic Product (%GDP), the level of indirect taxes as percent of the Gross Domestic Product (%GDP) and the economic growth rate over the analysed period of time. According to the econometric model presented in this paper, it was proved that a positive change in the structure of indirect taxes will have a strong positive influence on the economic growth over a medium-term period. On the other hand, economic growth will be negatively influenced in the next period of time after implementing a positive change in the structure of direct taxes, then returning to a positive influence over a medium term period and maintaining that influence in the future time periods.

Suggested Citation

  • Bâzgan Ramona - Mihaela, 2018. "The impact of direct and indirect taxes on economic growth: An empirical analysis related to Romania," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 12(1), pages 114-127, May.
    • Handle: RePEc:vrs:poicbe:v:12:y:2018:i:1:p:114-127:n:12
    DOI: 10.2478/picbe-2018-0012
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    References listed on IDEAS

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    1. Irena Szarowská, 2011. "Changes in taxation and their impact on economic growth in the European Union," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 59(2), pages 325-332.
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    4. Szarowska, Irena, 2013. "Effects of taxation by economic functions on economic growth in the European Union," MPRA Paper 59781, University Library of Munich, Germany.
    5. European Commission, 2016. "Taxation trends in the European Union: 2016 edition," Taxation trends 2016, Directorate General Taxation and Customs Union, European Commission.
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