Explaining Total Revenue in terms of Capital Expenditure, Current Expenditure and Value Added Tax: Albanian Case

Ditmir Sufaj

Abstract


Total Revenue is an important indicator of the economic wellbeing of a particular
country. As it is known government has revenue either by the taxes it collects from
society or by the investments it undertakes. This paper is interested in studying
the total revenue component for government and some of the factors that affect it.
The factors chosen in this paper are capital expenditure, current expenditure and
VAT (value added tax). The factors chosen here are a combination of investment
from government (including capital and current expenditure) and tax collection
(including VAT), which as stated before are the most important components for a
governments total revenue.
This paper is especially interested in the Albanian case and the interrelation among
the total revenue and the other three factors based on time series econometric model.
As a consequence it will be based more on econometrics, but without leaving behind
the economic interpretation of the results. It will be important to measure whether
these factors have a positive or negative impact in the total revenue; whether their
impact is statistically significant or not and whether they are sufficient indicators to
determine the actual values of total revenue.
Before taking into consideration all these econometric factors, an economic analysis
will be applied in the literature review section; and thereafter the economic
expectations and the actual results of the econometric model will be compared, and
by this way will be determined the validity of the model.
Keywords: Total Revenue, CAPEX, Current Expenditure, VAT, Econometric model,
Albania


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