FISCAL ELASTICITIES AND ECONOMIC CYCLES: AN ECONOMETRIC STUDY ON TAX REVENUES AND UNEMPLOYMENT (1999–2018)

This research uses an econometric approach to examine the relationship between budget revenues, tax revenues, and unemployment in the economy over the period 1999-2018. A multivariate regression of official data was constructed, from which the most important determinants of budget revenues were identified. The results of the analysis show that taxes are the strongest determinant of budget revenues, while the effect of unemployment revenues is statistically insignificant and weak. The model explains about 87% of the variation in budget revenues, losing its full explanatory power. It does not require statistically significant, reliable, and homoscedasticity with normalized residuals to be included in diagnostic tests, including F-Fisher, T-Student, White, and CUSUM tests. The results suggest that an increase in tax revenues leads to a proportional increase in budget revenues, and higher unemployment rates lead to fiscal instability due to the reduction of tax bases. The model provides a reasonable basis for planning fiscal performance and optimal future tax and budget policies.