Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/299299 
Year of Publication: 
2024
Series/Report no.: 
ADB Economics Working Paper Series No. 727
Publisher: 
Asian Development Bank (ADB), Manila
Abstract: 
We investigate the conditions under which tax revenues can enhance economic growth. Using a newly constructed dataset consisting of 135 economies and spanning the period 1990-2019, we study how changes in tax revenues impact economic growth using a panel vector autoregression (PVAR) model. Tax revenues have a persistent positive impact on growth, and the association is especially pronounced in emerging economies. Strict inflation targeting, low-inflation, flexible exchange rates, a more developed financial sector, higher investment rates, and strong governance reinforce the growth-enhancing effect of taxes, but these results are conditional on the income level of the economy. Our findings imply that the effect of taxes on growth should be evaluated within macroeconomic and structural constraints.
Subjects: 
taxes
growth
JEL: 
H20
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

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