Impact of non-Tax revenue on economic growth: time series analysis of non- tax revenue from 1982 to 2021
Nyakato, Hannah Aine
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This dissertation investigates the impact of Non-Tax Revenue (NTR), comprising government income sources other than taxes, on economic growth in Uganda through a comprehensive time series analysis covering the period from 1982 to 2021. Using Autoregressive Integrated Moving Average (ARIMA) modeling techniques, this study explores the relationship between NTR and Gross Domestic Product (GDP), aiming to uncover their causal connections and long-term implications. Granger Causality tests were conducted to investigate the direction of causality between GDP and NTR. The results of this analysis are complemented by key statistical findings and provide valuable insights into the Ugandan economic landscape. The study utilizes 40 years of economic data and employs Kendall's tau-a and Kendall's tau-b correlation coefficients to assess the strength and direction of the relationship between GDP and NTR. The analysis reveals a strong positive association, with Kendall's tau-a and Kendall's tau-b coefficients both measuring 0.8769, indicating a high degree of positive correlation between NTR and GDP. This high degree of correlation is further supported by the extremely low p-value (Prob > |z| = 0.0000), indicating a significant relationship. Descriptive statistics of the macroeconomic variables, GDP and NTR, further illustrate the dynamics of these factors. The mean GDP over the observed period was 37,400.31, with a standard deviation of 48,528.86, and a minimum value of 5.184891 and a maximum of 160,261.5. NTR exhibited a mean of 134.605, with a standard deviation of 143.0882, a minimum value of 0.52, and a maximum of 440.0529. These statistics provide an understanding of the variability and distribution of these key economic indicators. The results indicate that GDP significantly Granger causes NTR, with a chi-squared statistic of 12.868 and a probability of 0.002. However, the tests also reveal that NTR does not significantly Granger cause GDP, with a chi-squared statistic of 0.35852 and a probability of 0.836. This suggests a unidirectional causal relationship running from GDP to NTR, implying that changes in GDP can influence NTR but not the other way around. In conclusion, the findings suggest a significant positive correlation between Non-Tax Revenue (NTR) and economic growth in Uganda, with economic growth Granger causing NTR. However, the study did not account for structural changes in the data, leaving room for further research to explore the impact of such changes on the NTR-economic growth relationship.