Effect of Indirect Taxes on the Inflation in Turkey

Adil Akinci () and Özer Özçelik
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Özer Özçelik: Kütahya Dumlupinar University

Journal of Finance Letters (Maliye ve Finans Yazıları), 2018, vol. 33, issue 110, 9-20

Abstract: Taxes have financial and non-financial objectives. While revenue generation to ensure the financing of public expenditures basically constitutes the financial objectives of taxes, economic stability, economic growth and development and fair income distribution targets constitute the non-financial objectives of taxes. When economic stability, one of non-financial objectives, is considered, price stability and full employment level come into question. When it comes to price stability, inflation usually comes to the forefront in developing countries. In this context, in the study, the relationship between indirect taxes and inflation during 2006:M1-2018:M5 period in Turkey was analyzed by the ARDL (Autoregressive Distributed Lag Model), which is one of time series analysis methods, and its effectiveness on non-financial objectives of taxes was investigated. As a result of the findings obtained, it has been determined that there is a long-term cointegration relationship between indirect taxes and inflation.

Keywords: Indirect Tax; Inflation; Time Series Analysis; ARDL (search for similar items in EconPapers)
JEL-codes: A10 C50 E69 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:acc:malfin:v:33:y:2018:i:110:p:9-20

DOI: 10.33203/mfy.455483

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