Journal of Comparative Asian Development

Jun 4, 2019

Articles in journals

Jalles, J.

17(2)

1-20

This paper provides both short-and long-run tax buoyancy estimates for a sample of 29 Asian countries between 1990 and 2015. Econometrically, we rely on Mean Group and Pooled Mean Group estimators to find that in 13 out of 29 countries growth has improved fiscal sustainability over time. Moreover, in only 5 out of 29 countries the tax system has acted as a good automatic stabilizer. Furthermore, tax buoyancy seems to be larger during contractions than during times of economic expansions. Finally, countries with a relatively larger agricultural sector (human capital index, stronger institutions and more open to trade) show a lower (higher) long run buoyancy coefficient estimate, while high inflation and economic volatility reduce that ability to maximize tax collection.

Error correction model; Fiscal sustainability; Pooled mean group; RecessionShort vs long runTax elasticity