Republic of Lithuania: Selected Issues Paper

International Monetary Fund

No 2011/327, IMF Staff Country Reports from International Monetary Fund

Abstract: This Selected Issues Paper quantifies the variability of tax elasticities in Lithuania using two alternative methods: rolling regressions and pooled mean group estimator. The analysis is motivated by the systematic variation of tax revenues observed over the economic cycle. Both methods confirm that tax elasticities moved with the cycle, which can be attributed to the procyclical tax compliance tendencies and structural composition effects across tax bases. The results of the study emphasize the importance of accounting for cyclical variation in tax elasticities when making short-term tax revenue projections.

Keywords: ISCR; CR; crisis; GDP; Latvia; investment ratio; trading partner growth; revenue gap; employment participation ratio; FDI flow; Tax elasticity; Value-added tax; Personal income; Private consumption; Baltics; Eastern Europe; Asia and Pacific (search for similar items in EconPapers)
Pages: 39
Date: 2011-11-21
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