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

                    Table 4 presents the computed F-statistics from F-bounds tests. Instead of critical
                    values  compiled  by  Pesaran  (2001),  Narayan  (2005)  critical  values  are  used  as
                    Narayan (2004) argues that Pesaran (2001) critical values are not suitable for small
                    sample  sizes.  Rejecting  the  null  hypothesis  means  that  there  is  a  cointegration
                    relationship between independent variables.

                    Table 4: F-bounds test results (Null hypothesis: No level relationship)
                      Critical value     Test statistic   Significance      I(0)            I(1)
                          source            value
                                                         Model 1
                     Pesaran (2001)      F-statistic =       1%             3.29           4.37
                     Narayan (2005)         27.41            1%             3.37           4.72
                                                         Model 2
                     Pesaran (2001)      F-statistic =       1%             3.29           4.37
                     Narayan (2004)         14.22            1%             3.37           4.72
                    Source: Compiled by author based on Eviews calculations

                    As you can see from the table above, all series are cointegrated, thus the long-run
                    coefficients can be estimated.  The estimated long-run coefficients are presented in
                    Table 5:

                    Table 5: Long-run estimate results and robustness check results
                                              Panel A: Long-run estimate results
                              Variables                  Model 1                    Model 2
                          Dependent variable         Real GDP growth         Real non-oil GDP growth
                                                         -0.67**                     -0.58*
                              Constant
                                                          (-2.45)                    (-1.69)
                                                         -0.10***                   -0.16***
                            LRGOVREV
                                                          (-2.97)                    (-4.31)
                                                         0.09***                    0.13***
                            LRCAPINV
                                                          (3.97)                     (2.65)
                                                         0.10***                     0.11**
                           LRTOTTRADE
                                                          (2.72)                     (2.65)
                                                         0.32***                    0.33***
                             OILPRCG
                                                          (3.91)                     (3.02)
                                              Panel B: Robustness check results
                                                         Model 1                    Model 2
                             R-squared                     0.71                       0.72
                         Adjusted R-squared                0.66                       0.68
                            Observations                    69                        69
                                                       2
                                                                                  2
                        Serial correlation (1 lag)   X SC = 0.42 (0.52)         X SC = 1.95 (0.16)
                                                       2
                                                                                 2
                       Serial correlation (4 lags)   X SC = 1.12 (0.89)         X SC = 3.83 (0.43)
                             Normality               JBN = 71.15 (0.00)         JBN = 0.07 (0.97)
                           *** **
                                   *
                     Notes:  ,   and   denote statistical significance at 1%, 5% and 10% level, respectively. Numbers
                     in brackets in Panel A represent t-Statistics. Numbers in brackets in Panel B represent P-values.
                    Source: Compiled by author based on Eviews calculations
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