An Empirical Study on Dynamic Relationship between China’s Tax Revenue and GDP: 1990-2007

摘要

Based on China’s relevant data during1990-2007, the vector error correction model between tax revenue and GDP was established, and their dynamic relationship was analyzed with impulse response function. The findings suggest that bidirectional causality exists between them. Firstly, GDP has long-term and significant impact on tax revenue Secondly, if tax was imposed on a positive impulse, tax revenue in the next 5 periods will present ascensive trend, but GDP has no remarkable changes in next 2 periods, this phenomenon is probably caused by a long time lag from the change of tax to GDP.