Taxes and economic indicators: an empirical investigation for Greece

Abstract

This paper examines the relationship between tax revenues and three economic indicators,
change in gross domestic product, savings and investment as a percentage of GDP, using annual
data for the period 1965-2002. The purpose of the paper is to test the long-run relationship between
tax variables and economic indicators using cointegration analysis suggested by Johansen
and Juselious. Moreover, we applied the seemingly unrelated regression (SURE) approach in
order to determine tax components. The results of this analysis present a long run relationship
between economic indicators and tax revenue variables.