Advanced empirical research based on structural equation modeling (SEM) regarding the impact of tax revenue on GDP dynamics at EU-28 level

Cristi Spulbar, Mohammad Ehsanifar, Ramona Birau, Arezoo Babaie, Daniel Iulius Doagă

Abstract


The main objective of this empirical study is to investigate the impact of tax revenue on GDP dynamics at EU-28 level based on structural equation modeling (SEM). We applied structural equation modeling (SEM) which represents a multivariate statistical analysis technique used especially for analyzing structural relationships between measured variables and latent structures. Selected taxes are the following: environmental taxes, indirect taxes, social contributions, taxes on capital, taxes on labour, taxes on property, and direct taxes. The sample period includes a long time horizon during 2005-2017 for each member states of EU-28. Our empirical findings revealed the level of taxation exhibits an increased influence on GDP dynamics in case of EU-28 member states.


Keywords


taxation; structural equation modeling (SEM); economic growth; fiscal policy; GDP; regression analysis

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10.47743/saeb-2021-0009