The impact of fiscal policies on Albanian economic growth: The case of value-added tax

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Abstract

This paper aims to give an overview and examine the effects of value-added tax (VAT) income as one of the main elements of fiscal policies on Albanian economic growth GDP (Demi, Hysa, & Nanaj, 2018), for the period 1999–2019, considering also the implementation of VAT legislation rules. The quantitative analysis methods are used in this study based on the wide range of theoretical and practical cases obtained from the literature to figure out the existing link between VAT as the explanatory variable and GDP as the explained variable. Based on empirical testing hypotheses on the importance of econometric models, the statistical information was selected by public institutions in Albania and the data is in the form of time series, often self-correlated from period to period. This feature was considered to avoid the consequences caused by autocorrelation and following the detection, the corrective measures were taken, in order for the statistical inference to be as objective as possible. Finally, this paper argues that VAT rules are considered a very important element for the Albanian economy, and the relevance of this study is to serve policymakers in drafting fiscal policies in the function of economic growth (GDP) in the future.

Keywords: Fiscal Policy, Economic Development, Government Policies and Regulation, Public, Economics, Business Taxes and Subsidies, Dynamic Model

Authors’ individual contribution: Conceptualization — A.D.; Methodology — A.D. and S.X.; Formal Analysis — A.L., S.S., and S.U.; Writing — Original Draft — A.D., S.X., and A.L.; Writing — Review & Editing — S.S. and S.U.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

Acknowledgements: The Authors acknowledge the role of the ISCBF 2021 Conference participants (University “Aleksandër Moisiu”, Albania), for insightful and very constructive comments.

JEL Classification: E62, F63, G28, H20, H25, K34

Received: 09.06.2021
Accepted: 03.11.2021
Published online: 05.11.2021

How to cite this paper: Demi, A., Xhaferri, S., Uku, S., Shahini, S., & Lushi, A. (2021). The impact of fiscal policies on Albanian economic growth: The case of value-added tax [Special issue]. Journal of Governance & Regulation, 10(4), 311–325. https://doi.org/10.22495/jgrv10i4siart11