Fiscal Optimality in Côte d’Ivoire : An approach using Hansen's TAR technique (1999)

Abstract

This paper seeks to estimate the optimal tax rate in Côte d'Ivoire over the period 1960-2020. The results of the non-linearity test confirm the evidence of the non-linearity relationship. In addition, the results of the TAR technique proposed by Hansen (1999), show evidence of several tax maxima. Indeed, the optimal tax rate in Côte d'Ivoire is 25.25% of GDP. Beyond this threshold, taxation leads to a reduction in economic activity. These results imply that the levels of economic growth regularly achieved by the Ivorian economy have remained below their potential. These results clearly show that a large part of the Ivorian economy operates in the informal sector.