Acta Univ. Agric. Silvic. Mendelianae Brun. 2017, 65, 1023-1029
Published online 2017-07-03

Modelling Oil‑Sector Dependency of Tax Revenues in a Resource Rich Country: Evidence from Azerbaijan

Akif Musayev1,2,3,4, Khatai Aliyev5,6

1Institute of Economics, Azerbaijan National Academy of Sciences, Baku, Azerbaijan
2Near East University, Nicosia, TRNC
3Azerbaijan University, Baku, Azerbaijan
4Azerbaijan State Oil and Industrial University, Baku, Azerbaijan
5Department of World Economy, Baku Engineering University, Khirdalan, Azerbaijan
6Institute of Control Systems, Azerbaijan National Academy of Sciences, Baku, Azerbaijan

Forecasting tax revenues is an important issue in budget planning. As a resource rich country, Azerbaijan’s budget revenues is severely depend on oil price and production levels. This study investigates oil sector dependency of state budget tax revenues in case of Azerbaijan by employing FMOLS, DOLS and CCR cointegration methods for the period of 2000Q1 – 2015Q2. Empirical results indicate statistically and economically significant positive long‑run impact of both oil related factors on tax revenues. Considering current fiscal challenges in the country, research findings are very useful for policy purposes and fills the gap in the literature by drawing mechanism of the association and estimating the relationship empirically.


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