Determinants of Government Efficiency
Author | : David Hauner |
Publisher | : International Monetary Fund |
Total Pages | : 28 |
Release | : 2008-09 |
ISBN-10 | : IND:30000111371278 |
ISBN-13 | : |
Rating | : 4/5 (78 Downloads) |
Download or read book Determinants of Government Efficiency written by David Hauner and published by International Monetary Fund. This book was released on 2008-09 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines tax revenue during the business cycle by estimating the relationship between tax revenue efficiency and the output gap. We find a positive and significant relationship between these variables; results are consistent for quarterly and annual data, and across advanced and developing economies. We also find that a worsening (improvement) in the VAT C-efficiency is driven by shifts in consumption patterns and changes in tax evasion during contractions (expansions). A key implication is that, particularly during major economic booms and downturns, policy makers should look beyond simple, long-run revenue elasticities and incorporate into their analysis the effects of the economic cycle on tax revenue efficiency.