The Impact of Direct and Indirect Taxes on the Growth of the Turkish Economy

Suna Korkmaz (), Metehan Yilgor () and Fadime Aksoy ()
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Suna Korkmaz: Bandirma Onyedi Eylul University, Department of Economics, Bandirma, Turkey
Metehan Yilgor: Bandirma Onyedi Eylul University, Department of Economics, Bandirma, Turkey
Fadime Aksoy: Bandirma Onyedi Eylul University, Department of Economics, Bandirma, Turkey

Public Sector Economics, 2019, vol. 43, issue 3, 311-323

Abstract: Governments are able to implement monetary and fiscal policies to achieve economic objectives, such as increasing production, ensuring price stability, improving the balance of payments, and achieving full employment. While central banks carry out monetary policies, governments, in contrast, develop fiscal policies. Fiscal policy instruments can include public expenditures, taxes, and borrowing. In countries that have low savings levels, individuals participate in public expenditures by spending a large part of their income. Therefore, taxes are effectively used as a major policy instrument. The impact of both direct and indirect taxes on economic growth in Turkey has been analyzed by employing the autoregressive distributed lag (ARDL) approach. Test results suggest a positive and significant impact of indirect taxes on economic growth as well as a negative and significant impact of direct taxes.

Keywords: ARDL; direct taxes; economic growth; indirect taxes; Turkey (search for similar items in EconPapers)
JEL-codes: C22 E62 O47 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:ipf:psejou:v:43:y:2019:i:3:p:311-323

DOI: 10.3326/pse.43.3.5

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