Tax Structure and Economic Growth in Côte d’Ivoire: Are Some Taxes Better Than Others?
Journal Title: Asian Economic and Financial Review - Year 2011, Vol 1, Issue 4
Abstract
This paper examines the relationships between taxation and output in Côte d’Ivoire during the period 1960-2006. The bounds testing approach to cointegration devised by Pesaran et al. (2001) showed that tax variables, except direct tax, and real GDP are cointegrated and positively related in the long-run. The results of Granger causality tests indicated bidirectional causality between tax revenues and output in the long-run, implying a virtuous circle of tax and GDP. Direct taxes, however, did not cause GDP both in the short and long-run. These findings suggest that i) the tax revenues and, therefore, budget deficit, depend upon the economic activity, and ii) switching the tax burden from direct to indirect taxes is likely to have a positive effect on the economic output.
Authors and Affiliations
Yaya KEHO| Ecole Nationale Supérieure de Statistique et d’Economie Appliquée Côte d’Ivoire
Keywords
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