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The dynamics between financial market development, taxation propensity, and economic growth: a study of OECD and non-OECD countries

Rudra P. Pradhan (), Mak Arvin (), Mahendhiran S. Nair () and John H. Hall ()
Additional contact information
Rudra P. Pradhan: Indian Institute of Technology
Mahendhiran S. Nair: School of Business, Sunway University Malaysia
John H. Hall: University of Pretoria

Quality & Quantity: International Journal of Methodology, 2022, vol. 56, issue 3, No 30, 1503-1534

Abstract: Abstract This study examined the interactions between financial market development, taxation propensity, and economic growth in OECD and non-OECD countries for the period 1961–2019. The aim was to investigate whether there is temporal causality between these variables. Using dynamic panel data modelling, we found long- and short-run inter-linkages between the variables. The study’s most robust finding is that both financial market development and taxation propensity stimulate economic growth in the long run. In contrast, the short-run results are not uniform and depend on the specific measure of financial market development used. Overall, the empirical results suggest that an integrated policy approach in developing financial markets and elevating countries’ taxation propensity will contribute to the economic growth of both the OECD and non-OECD countries. Graphic abstract

Keywords: Financial market development; Taxation propensity; Economic growth; OECD countries; Non-OECD countries (search for similar items in EconPapers)
JEL-codes: E31 E44 O16 O43 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s11135-021-01192-w

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