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Optimal tax rate and economic growth : An empirical application to the case of Lebanon

Rosette Ghossoub Sayegh
Université Saint-Joseph de Beyrouth, Faculté de Sciences Économiques, Centre de Documentation et de Recherche Économique (CEDREC), Liban Rosette GHOSSOUB SAYEGH,
rosette.sayegh[AT]usj.edu.lb.
ORCID : 000-0002-7576-1619

Nisrine Hamdan Saade
Université Saint-Joseph de Beyrouth, Faculté de Sciences Économiques, Centre de Documentation et de Recherche Économique (CEDREC), Liban ORCID : 000-0002-5173-2143

Abstract: Many studies highlight the significant impact of fiscal policy on the economic growth rate, in countries with a precarious financial and economic situation, similar to the Lebanese case. An empirical study, covering the period 1971–2017, is conducted in this paper, to determine the optimal tax burden that maximizes the economic growth rate in Lebanon. A non-linear relationship between the tax burden and economic growth is exa- mined, using the Scully static model Scully (1996, 2003). Looking at the country’s periods of political conflict and economic instability, the econometric model estimates lead to an optimal tax burden of 20.62%.

Keywords: optimal taxation, government spending, budget deficit, economic growth.

Jel Classification : H21, H50, H62, O47.

DOI: https://doi.org/10.18559/RIELF.2020.2.3