Acta Universitatis Danubius. Œconomica, Vol 14, No 5 (2018)

Abstract

Although tax revenues are one of the important parameters in public sector, their relationships with economic growth have been discussed in fiscal economics theory for a long time. The purpose of this study is to determine whether tax rates affect the long-run economic growth rate both in short and long run for the period of 1980-2015.  In the study, bounds test approach of the ARDL model developed by Pesaran et al. (2001) was employed. The long-run economic growth rates were produced by three different filters.  The main finding of the study is that there exists the U-shaped curve relationship between average tax rate and long-run economic growth rate for Turkey.