2019年6月10日

6/30 発表要旨(10)

Pichsovann CHHIM
(Asia Public Policy Program (APPP), Hitotsubashi University)

"Taxes, Expenditures and Economic Growth in Lower Income Countries: Panel Data Analysis"

 As most low-income countries are experiencing high fiscal deficit, fiscal consolidation is essential to adhere to fiscal sustainability. However, consolidating government balance sheet is puzzling amid macroeconomic stability. This paper examines the empirical relationship between taxes and expenditures decomposition on economic growth in 21 lower-income countries. Gupta Clements, Baldacci and Mulas-Granados (2005) study the impacts of fiscal consolidation but they restricted taxes in their study. Whereas Nantob (2014) studies only impacts of taxes on economic growth. This paper combines both taxes and government expenditures into one specification. Having this combination, findings would be diving into direct effects of both taxes and expenditure in growth. Fixed Effect estimator is applied along with sensitivity analysis of robust OLS, 2 Stage Least Square (2SLS) and Fixed Effect 2SLS. Empirical findings suggest that a) government size does matter to growth b) public spending on gross capital formation has substantial impact on economic growth with high statistical significance c) government expenditure on goods and services and subsidies exhibits positive impact, regardless strong statistical evidence. While d) interest payment has a robustly negative relationship. Moreover, revenue from the tax on goods and service appears to be a potential resource. Revenue from tax on income, profit, and capital gain, and international trade taxes hamper growth.