Preliminary communication

https://doi.org/10.3326/pse.43.3.5

The Impact of Direct and Indirect Taxes on the Growth of the Turkish Economy

Suna Korkmaz ; Bandırma Onyedi Eylul University, Department of Economics, Bandırma, Turkey
Metehan Yilgor ; Bandırma Onyedi Eylul University, Department of Economics, Bandırma, Turkey
Fadime Aksoy ; Bandırma Onyedi Eylul University, Department of Economics, Bandırma, Turkey

Abstract

Governments are able to implement monetary and fiscal policies to achieve economic objectives, such as increasing production, ensuring price stability, improving the balance of payments, and achieving full employment. While central banks carry out monetary policies, governments, in contrast, develop fiscal policies. Fiscal policy instruments can include public expenditures, taxes, and borrowing. In countries that have low savings levels, individuals participate in public expenditures by spending a large part of their income.

Therefore, taxes are effectively used as a major policy instrument. The impact of both direct and indirect taxes on economic growth in Turkey has been analyzed by employing the autoregressive distributed lag (ARDL) approach. Test results suggest a positive and significant impact of indirect taxes on economic growth as well as a negative and significant impact of direct taxes.

Keywords

ARDL; direct taxes; economic growth; indirect taxes; Turkey

Hrčak ID:

225239

URI

https://hrcak.srce.hr/225239

Publication date:

14.9.2019.

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