Government spending efficiency on economic growth: roles of value-added tax

• Main Authors: Chan, Sok-Gee, Ramly, Zulkufly, Abd Karim, Mohd Zaini
• Format: Article
• Language: English; English; English; English
• Published: Taylor and Francis 2017
• Subjects: HJ Public Finance; HJ2240 Revenue. Taxation; HJ7451 Expenditures. Government spending
• Online Access: http://irep.iium.edu.my/55882/1/Government%20Spending%20Efficiency%20on%20Economic%20Growth%20Roles%20of%20Value%20added%20Tax.pdf; http://irep.iium.edu.my/55882/7/55882_Government%20Spending%20Efficiency_MYRA.pdf; http://irep.iium.edu.my/55882/8/55882_Government%20Spending%20Efficiency_SCOPUS.pdf; http://irep.iium.edu.my/55882/9/55882_Government%20Spending%20Efficiency_WOS.pdf; http://irep.iium.edu.my/55882/; http://www.tandfonline.com/doi/abs/10.1080/1226508X.2017.1292857?journalCode=rger20

This study examines the impact of government spending efficiency on the economic growth of 115 countries with the value-added tax (VAT) system. We seek to examine the moderating role of the VAT system on the relationship between public spending efficiency and the economic growth. Using Generalized Method of Moments estimation based on two-step estimate, we found (1) government spending efficiency promotes economic growth, (2) the VAT system is found to enhance the effect of an efficient government spending on the economic growth and (3) the moderating role of the VAT system is further enhanced by quality of democracy and legislative strength of the government.