Fiscal trap Gabon economy case study

Abstract : The persistence of the economic and financial crisis present in Greece teaches that the combination of an increase in the tax rate with austerity in periods of recession creates a vicious circle where if connected decrease in tax revenues, reduced gross domestic product and increase public debt ratio on GDP. Th is mechanism is known as the fi scal trap.
Thanks to the generalized moments method in system (MMG), we verifi ed this hypothesis for the Gabonese economy.

Keywords : fiscal trap, generalized moments method in system, growth Laff er’s curve, optimal tax rate, public deficit.

JEL Classifi cation: C36, E62, H21, O11, O23, 041.