Scientific Papers


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ISSN: 2306-3483 (Online), 2071-8330 (Print)

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The impact of tax gap on macroeconomic stability: Assessment using panel VEC approach

Vol. 14, No 1, 2021


Oleksii Lyulyov


Department of Marketing, Sumy State University,


ORCID 0000-0002-4865-7306

The impact of tax gap on macroeconomic stability: Assessment using panel VEC approach

Serhiy Lyeonov


Sumy State University,


ORCID 0000-0001-5639-3008

Inna Tiutiunyk


Department of Finance and Entrepreneurship, Sumy State University,


ORCID 0000-0001-5883-2940

Joanna Podgórska


University of Information Technology and Management in Rzeszow,

Rzeszow, Poland

ORCID 0000-0002-6625-2767




Abstract. Imperfect tax legislation, high levels of corruption, and shadow economy lead to the deterioration of macroeconomic situation and economic imbalances in the countries. The state’s actual tax revenues’ inconsistency to its potential opportunities becomes the most acute problem for many countries. These processes cause a reduction in budget revenues due to the formation of tax gaps. The research aims to establish the causal links between tax gaps in the main types of taxes and the macroeconomic stability level. A comparative analysis of the theoretical basis for assessing the macroeconomic stability shows that to the greatest extent the requirement to ensure the reliable comparisons of different countries and achieve the main goals of a stabilization policy is possible using the concept of the macroeconomic stability pentagon. The article considers the basic version of this concept (developed by G. Kolodko) and its modifications. The authors have found that taxpayers often resort to various understatement schemes of their VAT and customs duties out of all indirect taxes. The volume of tax gaps for value added tax is calculated in the research. An empirical study on the causal relationships of tax gaps on value added tax and macroeconomic stability is carried out in the following logical sequence: determining the order of series integration using single root tests (ADF, IPS, LLC); evaluation of series cointegration by means of panel tests (Pedroni and Kao), determination of the strength and direction of the causal relationship between the series based on a dynamic approach (VEC model). The findings on the volume of tax gaps by major types of taxes and their causal links with the macroeconomic stability level may become targets for the organization’s legal regulation over paying taxes to the state budget.


Received: April, 2020

1st Revision: February, 2021

Accepted: March, 2021


DOI: 10.14254/2071-8330.2021/14-1/10


JEL ClassificationE60, E63, C23

Keywordsnational economy, pentagon of macroeconomic stability, stabilization policy, tax gap