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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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