International Journal of Business and Economics Research

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Impact of Taxation on Economic Growth in an Emerging Country

Received: Feb. 13, 2020    Accepted: Feb. 25, 2020    Published: Mar. 06, 2020
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Abstract

Tax revenue and economic growth in Jordan have been undertaking an upward growth path in absolute terms. A number of studies indicated mixed results for the effect of taxes on economic growth. Numerous of these studies found a negative relationship, others found that taxes affect economic growth positively. So this paper trying to investigate the short and long run effects of taxation on economic growth in an emerging country, Jordan. Annual data for the time period 1980 – 2018 used to develop an Auto-Regressive Distribution Lag (ARDL) approach. Results of the bounds test specify that the variables of economic growth, taxes, capital and trade are cointegrated. The empirical results of the estimated model confirm that there is a negative short and long run relationship between taxes and economic growth in Jordan. Also results of the cointegration estimation indicate that the short run deviations from long run equilibrium is adjusted by 60% towards long run equilibrium each year. Thus the paper proposes that fiscal policy is essential to promote sustainable economic growth. Therefore policy makers of the fiscal policy should take in account a tax rates that are appropriate to make enough revenues needed to finance government utility expenses that promote economic growth.

DOI 10.11648/j.ijber.20200902.13
Published in International Journal of Business and Economics Research ( Volume 9, Issue 2, April 2020 )
Page(s) 73-77
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Taxation, Economic Growth, ARDL, Co-integration, Jordan

References
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[11] Padda, I., & Akram, N. (2009). The impact of tax policies on economic growth: Evidence from South-Asian economies. The Pakistan development review, 48 (4), 961-971.
[12] Dackehag M. & Hansson A. (2012). Taxation of income and economic growth: An empirical analysis of 25 rich OECD countries. Lund University Department of Economics, Working Paper No 6.
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[17] Mdanat, M., Shotar, M., Samawi, G., Mulot, J., Arabiyat, T. & Alzyadat, M. (2018). Tax structure and economic growth in Jordan, 1980-2015. EuroMed journal of Business, 13 (1), 102-127.
[18] Baiardi, D., Profeta, P., Puglisi, R., & Scabrosetti, S. (2019). Tax policy and economic growth: does it really matter? International tax and public finance, 26 (2), 282-316.
[19] Al-Shatti, A. (2014). The effect of fiscal policy on economic development in Jordan. International business research, 7 (12), 67-76.
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  • APA Style

    Alaaeddin Al-tarawneh, Mohammd Khataybeh, Sami Alkhawaldeh. (2020). Impact of Taxation on Economic Growth in an Emerging Country. International Journal of Business and Economics Research, 9(2), 73-77. https://doi.org/10.11648/j.ijber.20200902.13

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    ACS Style

    Alaaeddin Al-tarawneh; Mohammd Khataybeh; Sami Alkhawaldeh. Impact of Taxation on Economic Growth in an Emerging Country. Int. J. Bus. Econ. Res. 2020, 9(2), 73-77. doi: 10.11648/j.ijber.20200902.13

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    AMA Style

    Alaaeddin Al-tarawneh, Mohammd Khataybeh, Sami Alkhawaldeh. Impact of Taxation on Economic Growth in an Emerging Country. Int J Bus Econ Res. 2020;9(2):73-77. doi: 10.11648/j.ijber.20200902.13

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  • @article{10.11648/j.ijber.20200902.13,
      author = {Alaaeddin Al-tarawneh and Mohammd Khataybeh and Sami Alkhawaldeh},
      title = {Impact of Taxation on Economic Growth in an Emerging Country},
      journal = {International Journal of Business and Economics Research},
      volume = {9},
      number = {2},
      pages = {73-77},
      doi = {10.11648/j.ijber.20200902.13},
      url = {https://doi.org/10.11648/j.ijber.20200902.13},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.ijber.20200902.13},
      abstract = {Tax revenue and economic growth in Jordan have been undertaking an upward growth path in absolute terms. A number of studies indicated mixed results for the effect of taxes on economic growth. Numerous of these studies found a negative relationship, others found that taxes affect economic growth positively. So this paper trying to investigate the short and long run effects of taxation on economic growth in an emerging country, Jordan. Annual data for the time period 1980 – 2018 used to develop an Auto-Regressive Distribution Lag (ARDL) approach. Results of the bounds test specify that the variables of economic growth, taxes, capital and trade are cointegrated. The empirical results of the estimated model confirm that there is a negative short and long run relationship between taxes and economic growth in Jordan. Also results of the cointegration estimation indicate that the short run deviations from long run equilibrium is adjusted by 60% towards long run equilibrium each year. Thus the paper proposes that fiscal policy is essential to promote sustainable economic growth. Therefore policy makers of the fiscal policy should take in account a tax rates that are appropriate to make enough revenues needed to finance government utility expenses that promote economic growth.},
     year = {2020}
    }
    

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  • TY  - JOUR
    T1  - Impact of Taxation on Economic Growth in an Emerging Country
    AU  - Alaaeddin Al-tarawneh
    AU  - Mohammd Khataybeh
    AU  - Sami Alkhawaldeh
    Y1  - 2020/03/06
    PY  - 2020
    N1  - https://doi.org/10.11648/j.ijber.20200902.13
    DO  - 10.11648/j.ijber.20200902.13
    T2  - International Journal of Business and Economics Research
    JF  - International Journal of Business and Economics Research
    JO  - International Journal of Business and Economics Research
    SP  - 73
    EP  - 77
    PB  - Science Publishing Group
    SN  - 2328-756X
    UR  - https://doi.org/10.11648/j.ijber.20200902.13
    AB  - Tax revenue and economic growth in Jordan have been undertaking an upward growth path in absolute terms. A number of studies indicated mixed results for the effect of taxes on economic growth. Numerous of these studies found a negative relationship, others found that taxes affect economic growth positively. So this paper trying to investigate the short and long run effects of taxation on economic growth in an emerging country, Jordan. Annual data for the time period 1980 – 2018 used to develop an Auto-Regressive Distribution Lag (ARDL) approach. Results of the bounds test specify that the variables of economic growth, taxes, capital and trade are cointegrated. The empirical results of the estimated model confirm that there is a negative short and long run relationship between taxes and economic growth in Jordan. Also results of the cointegration estimation indicate that the short run deviations from long run equilibrium is adjusted by 60% towards long run equilibrium each year. Thus the paper proposes that fiscal policy is essential to promote sustainable economic growth. Therefore policy makers of the fiscal policy should take in account a tax rates that are appropriate to make enough revenues needed to finance government utility expenses that promote economic growth.
    VL  - 9
    IS  - 2
    ER  - 

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Author Information
  • School of Business, University of Jordan, Amman, Jordan

  • School of Business, University of Jordan, Amman, Jordan

  • School of Business, University of Jordan, Amman, Jordan

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