Rationality Test in Predicting Tax Revenues in Iran

Document Type : Research Paper

Authors

Department of Economics, Bu Ali Sina University, Hamedan, Iran

Abstract

Budget plays an important role in public sector management and administration .one of its components is revenues forecasting and Without the necessary accuracy in predicting revenues, government deficit will occur and people are incapable of facing with losses of reducing of important and essential services like education and health care. In this study, the rational expectations hypothesis is a matter of predict the government tax revenues. The models are estimated by OLS method show that between tax revenues only for the tax on legal entities that can not weak rationality hypothesis rejected. Also, the strong rationality test results to the model by using SURE estimation, suggests that strong rationality hypothesis is confirmed for forecast revenue from taxes on legal entities. This means that planners predict budget of income tax on legal entities unbiased and rational by using available information efficient.
 
JEL Classification: F62, H30, H68, E27.

Keywords