The Causal Relationship Between Tax Revenues and Economic Growth in OECD Countries

Abstract

Governments can implement various policies to achieve the economic goals they want to achieve. Among the policies they most often apply to are monetary and fiscal policies. Among fiscal policies, taxes are an important policy tool. Tax revenues are one of the fiscal policy tools that policymakers apply to achieve the goal of economic growth. Changes in tax revenues can directly or indirectly affect economic growth through various channels. In this study, randomly selected in 9 OECD countries (France, Germany, Greece, Hungary, Italy, Poland, Spain, Turkey and United Kingdom) with annual data from the period 2010-2019, were investigated to find the relationship between tax revenues and economic growth using panel causality test. As a result of the panel causality test, it was determined that there is a unidirectional causality relationship from tax revenues to economic growth.