THRESHOLD EFFECTS OF VALUE-ADDED TAX ON THE ECONOMIC GROWTH IN THE REPUBLIC OF KOSOVO

Authors

  • Arta Krasniqi Markaj South East European University
  • Besnik Fetai South East European University

Keywords:

consumer price index (CPI), economic growth, indirect taxation, threshold vector autoregressive, Value-Added Tax (VAT).

Abstract

The paper examined the relationship between VAT and economic growth in the Republic of Kosovo between 2000 and 2022. A technique of threshold Vector Autoregressive (TVAR) was employed, the findings of the study using TVAR analysis unveiled a statistically significant positive relationship between VAT and economic growth. TVAR model indicates that the VAT threshold is 16 percent and any level above 16 percent impedes or negatively affects economic growth in the Republic of Kosovo and any level below 16 percent impedes positively affecting economic growth. Our results suggest that the Kosovar economy should pay attention to its fiscal policy. It is therefore recommended to foster collaboration among government agencies, tax authorities, businesses, and international organizations to develop and implement effective VAT policies

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Published

13.07.2024

Issue

Vol. 13 No. 3 (2024)

Section

Accounting, Finance, Statistics and Economic informatics

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