Tax Policy and Economic Growth in Jamaica
Numerous studies have indicated that tax policies aimed at increasing government revenue have been regarded as an impediment to economic growth in both the short and long run.
This paper explores the impact of taxation on economic growth in Jamaica. This is done by using a general
autoregressive distributed-lag model, which jointly captures both short and long run effects.
Additionally, an attempt to ascertain the directional relationship between the explanatory variables and economic growth is done using Granger causality tests. The findings indicate that increasing revenue from indirect taxes is more conducive to economic growth in the long run. On the other hand, increasing the share of taxes from personal income (P.A.Y.E.) has the greatest harm on per capita GDP over time and correction to equilibrium from such an impact would take up to nine quarters. Read more
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