The issue of public revenues' determinants in the Republic of Serbia

Abstract

Policymakers should create a favourable macroeconomic framework to provide positive implications on public revenue collection. It implies designing a fiscal policy in the direction of generating the necessary revenues in order to achieve budget stability. Accordingly, identifying determinants that are crucial to generating higher revenues is an important challenge for every country. The aim of this paper is to identify how macroeconomic determinants affect the public revenues and which variable significantly improves public revenues. The subject of the paper includes an empirical analysis of the main macroeconomic variables and their implications on the public revenues level in the Republic of Serbia. The paper estimates the impact of selected explanatory variables such as gross domestic product, inflation, unemployment, export, public expenditures, total investment and population on public revenues in the Republic of Serbia from 2002 to 2020. The empirical findings confirmed macroeconomic framework significantly affects the public revenues for the observed period. The results of OLS model show that gross domestic product, export, public expenditure, total investment and population have a positive impact on public revenues. Conversely, inflation and unemployment negatively impact the public revenues in the analyzed period. The economic policy of the Republic of Serbia has to focus on a greater economic growth rate and export with an adequate level of public expenditures and total investment to ensure positive effects on the flows of the national economy.