Proceedings of The 2nd International Conference on Advanced Research in Business, Management and Economics
Revisiting the Causality Between Tax Revenue and Economic Growth in Turkey: A Bootstrap Rolling-Window Approach
Ibrahim Ozmen, Ceyhun Can Ozcan and Mustafa Gerceker
Governments have to spend money to meet social needs and intervene in economic life. Therefore, taxes can be used not only for fiscal purposes but also for extra-fiscal purposes. However, there are different approaches to the economic impact of taxes. While classical economics argues that taxes should be impartial, Keynesian economics and supply-side economics suggest that taxes can be utilized for socioeconomic reasons. This study analyses the causal relationship between tax revenues and economic growth using the bootstrap rolling-window approach for the Turkish economy based on the data of the period 1923-2017. The findings showed that there was a causal relationship between economic growth and tax revenues in both directions in different years. However, there was no relationship between the variables for the whole period. Changes in economic policies and tax amnesties have important implications for the interaction of variables.
Keywords: : tax revenue; economic growth; bootstrap rolling-window; fiscal discipline; Turkish economy.