Hassan Heidari; Arash Refah-Kahriz
Abstract
Attitude towards the role of government and reasons for the existence of government have experienced several changes and revisions during the last century. Attitude changes alter the duties and responsibilities assigned to the government and thus change the size and composition of public expenditure. ...
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Attitude towards the role of government and reasons for the existence of government have experienced several changes and revisions during the last century. Attitude changes alter the duties and responsibilities assigned to the government and thus change the size and composition of public expenditure. In the context of these attitudes, there are factors that could explain the changes in the size and the growth of government and consequently the government intervention in the economy over time and among different countries. This study investigates the relationship between government size and macroeconomic variables including economic growth, growth of oil revenues, growth of tax revenues, inflation in Iran using seasonal data during the period of 1990:1 – 2014:4 by applying Markov Regime Switching model. The results show that in the selected model consisting of two regimes with different government sizes, economic growth has a significant negative impact on government size in both regimes of zero and one. But inflation has different effects on government size: it has a negative effect in the regime zero (smaller government) and a positive effect in the regime one (bigger government). Moreover, the growth of oil revenues has a positive effect in both regimes, but the growth of tax revenues has a positive effect only in the regime one. Also, the results indicate that the government size in Iran has often been in the regime one with bigger government size and it is predicted that bigger government will be more sustainable than smaller government.
Hamid Sepehrdoust; Mahsa Barooti
Abstract
One of the main policies for solving the problem of economic growth obstacles and eliminating the sole dependence of the economy on oil revenues is to improve the country's tax system performance. The purpose of the present study was to investigate the factors affecting the tax system performance in ...
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One of the main policies for solving the problem of economic growth obstacles and eliminating the sole dependence of the economy on oil revenues is to improve the country's tax system performance. The purpose of the present study was to investigate the factors affecting the tax system performance in Iranian economy with special reference to Tanzi inflation effect. In order to achieve the research objectives, an Autoregressive Distributed Lag Model (ARDL) was used to estimate the short-term as well as long-term effects of macroeconomic variables on tax system performance for the period 1984-2014, emphasizing on the Tanzi inflation effect as substantial factor. The results showed that in the long term and short term, the inflation rate and agriculture sector's value added have negative significant effects, while human development indicator, industry and service sector's value added and government's expenditures have positive significant effects on tax system performance in Iran during the period of the study.Therefore,effective measures are required to be adopted for the extension of tax bases in the industry as well as service sectors on the one hand, and timely collection of tax revenues through shortening the courses of tax collection is also recommended on the other. These steps along with removal of unnecessary tax exemptions would certainly cause strengthening the efficiency level of tax system performance in the Iranian economy.
