Taxation and Political Stability

18 Pages Posted: 19 Jul 2011

See all articles by Fernando Estrada

Fernando Estrada

Universidad Externado de Colombia - Facultad de Finanzas, Gobierno y Relaciones Internacionales

Mihai Ioan Mutascu

University of Orleans - Laboratoire d'économie d'Orléans

Aviral Kumar Tiwari

Rajagiri Business School; IFHE University (ICFAI) - Faculty of Management

Multiple version iconThere are 2 versions of this paper

Date Written: July 18, 2011

Abstract

The present study is, in particular, an attempt to test the relationship between tax level and political stability by using some economic control variables and to see the relationship among government effectiveness, corruption, and GDP. For the purpose, we used the Vector Autoregression (VAR) approach in the panel framework, using a country-level panel data from 59 countries for the period 2002 to 2008. The salient features of this model are: (a) simplicity is based on a limited number of variables (five) are categorical or continuous and not dependent on complex interactions or nonlinear effects. (b) accuracy: a low level of errors, the model achieves a high percentage of accuracy in distinguishing countries with inclination to political instability, compared to countries with political stability, (c) generality: the model allows to distinguish types of political instability, both resulting from acts of violence and failure of democracies to show, and (d) novelty: the model incorporates a tool that helps evaluate and exclude many variables used by the conventional literature. This approach is mainly based on the recognition of state structures and the relations between elites and parties.

Keywords: Taxation, Political Stability, Connection, Effects, Panel VAR analysis

JEL Classification: H20, D70, C23

Suggested Citation

Estrada, Fernando and Mutascu, Mihai Ioan and Tiwari, Aviral Kumar, Taxation and Political Stability (July 18, 2011). Available at SSRN: https://ssrn.com/abstract=1888328 or http://dx.doi.org/10.2139/ssrn.1888328

Fernando Estrada (Contact Author)

Universidad Externado de Colombia - Facultad de Finanzas, Gobierno y Relaciones Internacionales ( email )

Calle 12 # 0 - 85 Este, Barrio La Candelaria
Bogota, DC Cundinamarca 1267
Colombia
05-71 - 3419900 - ext. 1202 (Phone)

HOME PAGE: http://ideas.repec.org/f/pga454.html

Mihai Ioan Mutascu

University of Orleans - Laboratoire d'économie d'Orléans ( email )

Rue de Blois BP6739
Rue de Blois
Orléans cedex 2, Centre 45067
France

Aviral Kumar Tiwari

Rajagiri Business School ( email )

Kochi, 682039
India

IFHE University (ICFAI) - Faculty of Management ( email )

India

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