A Comparison Of The Output Of Three Econometric Models In Evaluating The Relationship Between Taxes And Economic Growth In Nigeria.

Abstract

This study is set to compare the output of three econometric models – Linear, Log Quadratic and Transcendental Logarithm (Translog) – in evaluating the relationship between the major Nigeria taxes  and economic growth using the gross domestic product (GDP) as a proxy, to guide policy makers.. The neutrality (the extent to which taxes are indifference to) or variability (the extent to which taxes are inconsistent with) the outputs of the three comparative econometric models The major taxes are value added tax (VAT), petroleum profit tax (PPT), custom and excise taxes (CEX) and company income tax (CIT). . Findings revealed that the output from the Linear and the Translog models were similar, but the output from Log Quadratic model was different. The choice of an econometric model in evaluating relationship should be carefully decided rather than being arbitrary. One of the criteria for selecting appropriate model is a graphical representation of the relationship of the variables. Policy makers would therefore be guided on the appropriate econometric model(s) to use.