Symmetric and Asymmetric Causality Analysis of the Relationship between Inflation and Tax Revenues in Turkey

In this study, monthly time series data covering the period 2010M1-2021M6 were used so as to test the validity of the Tanzi effect in Turkey. As methods, in this study, are preferred symmetric causality analysis developed by Hacker and Hatemi-J (2006) and asymmetric causality analysis developed by Hatemi-J (2012). According to the results of Hacker and Hatemi-J (2006) symmetric causality analysis, one-way symmetric causality was determined from inflation to tax revenues. According to the result of Hatemi-J (2012) asymmetric causality analysis, an asymmetric causality was determined from negative inflation shock to tax revenue positive shock. In addition, the findings obtained from the asymmetric impulse-response functions show that increases in the negative shock of inflation increase the positive shock of tax revenues over time. The empirical findings obtained from the study strengthen the validity of the Tanzi effect in Turkey. Consequently, following effective policies in the fight against inflation is great importance in terms of tax revenues in Turkey.