Analysis of Tax Revenue Forecasting In Ethiopia: An Auto-regressive Distributed Lag Approach

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Addis Ababa University


This study focuses on the investigation of the causal long‐term relationship between tax revenue and nominal gross domestic product in Ethiopia. In this research the analysis of short term relationship also under taken. Using an error correction model (ECM) model with annual data over the last 32 years from 1980/81 to 2012/13, the study found a close relationship between tax revenue and nominal gross domestic product. The size of the long‐term parameters looks acceptable. The estimation technique employed in this research was auto regressive distributed lag integration approach with one period lag length and the result shows GDP and tax revenue own two period lags affects the tax revenue. These variables have also short term causal relationships and their granger causality is statistically significant.



Fiscal Policy Analysis and Management