Trade Liberalization-Trade Revenue Nexus: An Empirical Enquiry of Trade Laffer Curve of Pakistan

Authors

  • Khalil Ahmad Higher Education Department, Government of Punjab, Pakistan

DOI:

https://doi.org/10.30537/sijmb.v5i1.190

Keywords:

Trade Liberalization, Trade Revenue, Co-integration.

Abstract

This study tries to explore the trade revenue implication of trade liberalization for Pakistan. Laffer curve approach is used to see the non-linear relationship between trade openness and trade tax revenue.  Empirical evidence shows that trade openness has constructive impact on trade tax revenue in linear term. The non-linear relationship has also been explored in the presence of other macroeconomic variables. The marginal impact of non-liner squire trade liberalization has adverse effect on trade tax revenue. In the long run, the empirical investigation proves the existence of inverted U-shaped behavior between trade liberalization and trade tax revenue in Pakistan but this behavior does not exist in short run.

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Published

2018-07-04