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Javid Seyfullali: Tax Revenue and Economic Growth in Resource-Rich Country:
                                                      Empirical Evidence from Azerbaijan

                    Castanheira et al. (2012) researched the topic with different approach focusing on the
                    tax reforms implemented in the European Union and found that governments tend to
                    carry out tax reforms in better periods of the economy, not in periods of crisis, and to
                    direct  the  reforms  to  narrow  goals  instead  of  general  goals  (for  example,  general
                    economic growth, etc.). One of the important results of this study is that tax reforms
                    are usually initiated by political factors rather than macroeconomic reasons. This kind
                    of approach may result in procyclical fiscal policy.

                    Baiardi and colleagues (2017) did further research on the topic, they also found the
                    negative relationship between tax revenue and economic growth, but they didn’t find
                    any impact of increasing the weight of indirect taxes on economic growth. Another
                    finding  of  this  research  paper  was  the  negative  link  between  the  transition  from
                    personal  income  taxes  to  property  taxes  on  economic  growth,  contradicting  the
                    general results of Acosta-Ormaechea and Yoo (2012).

                    Matallah  and  Matallah  (2017)  analyzed  the  impact  of  fiscal  policy  on  economic
                    growth in Algeria over the period of 1970-2015. Besides government spending, they
                    analyzed  the  relationship  between  indirect  and  direct  tax  revenues  and  economic
                    growth in both the long and short term. Regarding direct tax revenue, they found a
                    statistically significant negative link between direct tax revenue and economic growth
                    in the long run. Estimating the short-term relationship, the authors interestingly found
                    a positive, but insignificant relationship between direct tax revenue and economic
                    growth.

                    The  reason  for  this  positive  relationship  in  short-term  may  be  the  result  of  the
                    automatic  stabilizers  effect.  Regarding  indirect  tax  revenue,  the  authors  found  a
                    statistically significant positive impact between indirect tax revenue and economic
                    growth in long term. Estimating the short-term relationship, the authors interestingly
                    found statistically significant negative relationship between indirect tax revenue and
                    economic growth. The reason for the negative relationship  in  short term between
                    indirect taxes and economic growth may be the disincentives for consumption created
                    by indirect taxes.

                    Barro and Wheaton (2019) found that decreasing income taxes and dividend taxes
                    result in an increase in the number of entities preferring a corporate management style.
                    In Nigeria, where oil revenues account for a significant share of the economy, there
                    are  studies  examining  the  relationship  between  different  types  of  taxation  and
                    economic growth.




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