INVESTMENTS AND TAXES IN ARMENIA (1997–2008)

Authors

  • Nina Kutsanyan Yerevan State University
  • Anaida Virabian Yerevan State University
  • Vahram Baghdasaryan Vanadzor State Pedagogical Institute

DOI:

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

Keywords:

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

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.

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Author Biographies

  • Nina Kutsanyan, Yerevan State University
    PhD student
  • Anaida Virabian, Yerevan State University
    PhD student
  • Vahram Baghdasaryan, Vanadzor State Pedagogical Institute

    Department of Informatics and Economics 

    Dr.,professor

References

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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.

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Published

2010-06-30