The Impact of Value-Added of Wholesale and Retail Trade and Hotels on Economic Activity: An Econometric Study in the Economy of Iraq between 2006-2021

Saad A. Hammad

Business Management and Strategy, 2023, vol. 14, issue 2, 128-143

Abstract: This research paper aims to measure the impact of value-added tax on wholesale and retail trade and hotels on economic activity in Iraq from 2006-2021. The study applied the Autoregressive Distributed Lag (ARDL) model to clarify the effect and demonstrate the relationship between the variables. Results showed an integrative relationship between the value-added tax on wholesale and retail trade and hotels (independent variable, X), and economic growth (the dependent variable Y). The short-term parameters showed a statistically significant relationship at a significance level of less than (1%), as the value-added tax on wholesale and retail trade and hotels significantly positively affects economic growth in the short term. Furthermore, the long-term relationship results showed a statistically significant negative relationship between the variables at a probability level of less than (1%). The value-added tax on wholesale and retail trade and hotels has a major impact on national economic expansion, as an increase in the value-added tax by one dinar leads to an increase in GDP by 10.52684 dinars. Â This result is consistent with economic theory and verifies the study's hypothesis. The quality and validity of the model were confirmed through standard tests, including a heteroscedasticity test, serial correlation test, diagnostic tests for functional form, and stability tests for estimated model parameters.

Date: 2023
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