1. Home

INVESTMENTS AND TAXES IN ARMENIA (1997–2008)

Nina Kutsanyan, Anaida Virabian, Vahram Baghdasaryan

Abstract


Present paper investigates the effect of changes in investment and taxes on the economic growth. Using quarterly data from 1997 to 2008 for Armenian economy we showed that the effect of the increase in investment and taxes on real GDP is positive or negative. The interrelation between GDP and investment is studied using the approach based on the development of VAR model. The analysis of this model allowed studying the behaviour of curves representing GDP and investment. In fact, we showed that the GDP curve is stable and oscillated and the investment curve is stable and none oscillated. Furthermore, we evaluated the impact of investment changes by 1% on the GDP growth which was equal to 0.4%. Then the model representing interrelation between GDP and taxes allowed evaluating the effect of tax changes by 1%. The findings allowed evaluating the effect of growth in investment and taxes depending on the GDP growth rate. Simultaneously, VAR system allowed evaluating the changes in GDP on the investment growth.

Keywords


Gross Domestic Product; investment; taxes; growth; rate; regression; vector auto regression system

Full Text:

PDF

References


Blanchard, O.J. and R. Perotti (2002). An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output, Quarterly Journal of Economics 117: 1329 – 1368.

Doppelhoffer, G., R. Miller, and X. Sala-i-Martin. The Determinants of Economic Growth. A Bayesian Averaging of Classical Estimates (BACE) Approach. Mimeograph. Columbia University, August 2002.

Dotsey M., (1990). The Economic Effect of Production Taxes in a Stochastic Growth Model. American Economic Review 1990; 80; 1168-1182.

Eaton J., (1981) Fiscal Policy, Inflation and the Accumulatioon of Risky capital. Review of Economic Studies 1981; 48; 435-445.

Kims S.J., (1998) Growth Effect of Taxes in an Endogenous Growth Model; to what extent do Taxes Affect Economic Growth? - a Puzzle. Journal of economic Dynamics and Control 1998; 23; 125-158.

Perotti R., (1999). Fiscal Policy in Good Times and Bad. Quarterly Journal of Economics 1999; 114; 1399-1436.

Romer C.D., Romer, D.H. (2007) The Macroeconomic Effects of Tax Changes; Estimates Based on a new measure of Fiscal Shocks. NBER working paper 2007; 13264.




DOI: https://doi.org/10.17770/lner2010vol1.2.1784

Refbacks

  • There are currently no refbacks.


Copyright (c) 2016 Nina Kutsanyan, Anaida Virabian, Vahram Baghdasaryan



This journal is distributed with an international license:

Creative Commons Attribution 4.0 International License
Rēzeknes Tehnoloģiju akadēmija, 2016 © Atbrīvošanas aleja 115, Rēzekne, Latvija. Tālrunis: 28325368;
Jautājumus un ierosinājumus sūtiet uz helpdesk@rta.lv