Goods and services tax, economic growth, Arrelano-Bond dynamic panel GMM estimation

This paper examines the impact of goods and services tax (GST) on economic growth in developing and developed countries using the Arellano-Bond dynamic panel GMM estimation. The empirical results reveal that GST is negatively correlated with economic growth in developing countries, while statistically significant and positively correlated with economic growth in developed countries. Therefore, we conclude that the implementation of the current flat rate of GST is least efficient in collecting the higher revenue and stimulate growth in developing countries. Hence, the implementation of the current GST should be revised to generate higher revenue and economic growth without burdening the consumption and real per capita income in developing countries.