Effect of Average Tax Rates on Long-Run Economic Growth Rate in Turkey

Although tax revenues are one of the important parameters in public sector, their relationships with economic growth have been discussed in fiscal economics theory for a long time. The purpose of this study is to determine whether tax rates affect the long-run economic growth rate both in short and long run for the period of 1980-2015.  In the study, bounds test approach of the ARDL model developed by Pesaran et al. (2001) was employed. The long-run economic growth rates were produced by three different filters.  The main finding of the study is that there exists the U-shaped curve relationship between average tax rate and long-run economic growth rate for Turkey