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Tax reform, inflation, financial development and economic growth in Malaysia

Loganathan, N. and Ismail, S. and Streimikiene, D. and Hassan, A. A. G. and Zavadskas, E. K. and Mardani, A. (2017) Tax reform, inflation, financial development and economic growth in Malaysia. Romanian Journal of Economic Forecasting, 20 (4). pp. 152-165. ISSN 1582-6163

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This study explores the dynamic linkage between financial development, inflation and economic growth on tax revenue condition for Malaysia. The Maki’s cointegration test with various structural breaks, bootstrap rolling window causality applications and the Lind and Mehlum (2010) estimation to capture the U-shape condition of tax-led-growth fundamental theory used in this study.The major finding using quadratic estimates indicates an inverted U-shape effect between the economic growths towards the tax revenue. When discussing about the full sample causality analysis, we found that there is unidirectional causality running between taxation with financial development and inflation; and there is also a unidirectional causality running from GDP to taxation. Furthermore, by using the bootstrap rolling window causality, we found numerous sup-period predictive powers of causalities running between taxation, financial development, inflation and economic growth. Overall, the findings indicate a growth-led-taxation effect in Malaysia due to the inverted U-shape effect appeared in this study.

Item Type:Article
Uncontrolled Keywords:Economic growth, Financial development, Inflation, Taxation
Subjects:H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
ID Code:75734
Deposited By: Widya Wahid
Deposited On:30 Apr 2018 13:13
Last Modified:30 Apr 2018 13:13

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