1Associate Professor, Department of Economics, BITS Pilani K K Birla, Goa Campus, Goa, India
2M. Sc. Dissertation Research Student, Department of Economics, BITS Pilani K K Birla, Goa Campus, Goa, India
*Corresponding Author: marikesh@goa.bits-pilani.ac.in
Online published on 2 January, 2019.
This paper assesses the effects of Tax elasticity on Government Spending state wise from 2001–2010 for five major states in terms of population. OLS Regression model is used where the relationships are assumed to be linear. The variables used in the regression model are: Gt = the government spending at the state level, the dependent variable Yt = the Gross Domestic Product (GDP) of the state Ct = the central assistance to the state, Et = the elasticity variable, The subscript ‘t’ refers to the corresponding year of analysis and b0, b1, b2, b3, b4, b5 are regression coefficients. In most of the cases, elasticity bore a positive and significant relation to the level of government spending except in the case of Bihar, where the coefficient was negative and insignificant.
Tax elasticity, Tax revenue, Govt. expenditure, OLS regression, GDP, Central assistance
