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Javid Seyfullali: Tax Revenue and Economic Growth in Resource-Rich Country:
Empirical Evidence from Azerbaijan
Table 7: Model 2 - short-run estimate results
Table 6
Variable Model 2
Dependent variable: Real non-oil GDP growth
-2.86***
−1 (-9.67)
1.09***
ΔRNOGDPG −1 (4.68)
0.46**
ΔRNOGDPG −2 (2.80)
0.14
ΔRNOGDPG −3 (1.37)
-0.17**
ΔLRGOVREV
(-2.18)
-0.37***
ΔLRTOTTRADE
(-2.78)
-0.47***
ΔLRTOTTRADE −1 (-3.43)
-0.41***
ΔLRTOTTRADE −2 (-2.84)
-0.16
ΔLRTOTTRADE −3 (-1.56)
0.19
ΔOILPRCG
(1.64)
-0.39***
ΔOILPRCG −1 (-3.26)
R-squared 0.91
Adjusted R-squared 0.89
Observations 68
Notes: Numbers in brackets represent t-Statistics.
Source: Compiled by author based on Eviews calculations
The negative link between government tax revenue and economic growth in the short
term contradicts the results of Aliyev and Nadirov (2016). It is noteworthy to mention
that real total trade and real capital investments variables were not used as control
variables in Aliyev and Nadirov (2016), these 2 variables perhaps control to more
extent for business cycle impacts and mitigate automatic stabilizers effect. Among
control variables, only oil price change is found to have a statistically significant link
(positive) with real total GDP growth in the short term. Regarding real non-oil GDP
growth, total trade seems to have a statistically significant negative relationship with
the non-oil economy in the short-term. The works of Seyfullayev (2020, 2022, 2023)
examined the impact of protectionist policies, trade openness, and financial
development on the economic growth of the Azerbaijani non-oil sector and found
evidence that government regulatory measures have not yet led to the desired results.
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