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Trade Liberalization-Trade Revenue Nexus: An Empirical Enquiry of Trade Laffer Curve of Pakistan

Khalil Ahmad and Safdar Ali
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Safdar Ali: Higher Education Department, Government of Punjab, Pakistan

Sukkur IBA Journal of Management and Business, 2018, vol. 5, issue 1, 66-84

Abstract: This study tries to explore the trade revenue implicationof trade liberalizationfor Pakistan. Laffer curve approach is used to see the non-linear relationship between trade opennessand trade tax revenue. Empirical evidenceshows that trade opennesshas constructiveimpact on tradetaxrevenue in linear term.The non-linear relationship has also been exploredin the presenceof other macroeconomic variables. The marginal impact of non-liner squire trade liberalization has adverseeffecton trade tax revenue.Inthelong run, the empirical investigation provesthe existence of inverted U-shaped behavior between trade liberalization and trade tax revenuein Pakistanbut this behavior doesnotexist inshort run.

Keywords: Trade Liberalization; Trade Revenue; Co-integration (search for similar items in EconPapers)
JEL-codes: C13 F10 F13 (search for similar items in EconPapers)
Date: 2018
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