We study the interactions between institutional quality, government expenditure, tax revenue, and economic growth in low-income countries (LICs) and lower middle-income countries (LMICs) over 2005–2019. The primary distinguishing factor of the paper is the simultaneous inclusion of all these four variables in a single temporal causal model. A second distinguishing feature of the paper is its focus on LICs and LMICs and a clear distinction between short-run and long-run results. Tax revenue is considered as general revenue as well as revenue from taxes on international trade, and customs and other import duties. Our results show that institutional quality, government expenditure, tax revenue, and economic growth often have endogenous links among each other in the short run. These results are not always uniform across our samples. On the other hand, a robust and uniform result across all samples is that the three covariates are important drivers of long-term economic growth. Thus, the co-development of stronger institutions and more effective fiscal policies (relating to taxes and government expenditure) appear to be key in procuring sustained long-term economic growth of countries.

我们研究了2005-2019年低收入国家（LIC）和中低收入国家（LMIC）的机构质量，政府支出，税收和经济增长之间的相互作用。本文的主要区别因素是同时包含所有这四个变量在一个单一的时间因果模型中。该论文的第二个显着特征是其对LIC和LMIC的关注以及对短期和长期结果的明确区分。税收被视为一般收入以及国际贸易，海关和其他进口税的税收收入。我们的结果表明，在短期内，机构质量，政府支出，税收和经济增长之间往往存在内在联系。这些结果在我们的样本中并不总是一致的。另一方面，所有样本的稳健而一致的结果是，这三个协变量是长期经济增长的重要驱动力。因此，共同发展 建立更强大的机构和采取更有效的财政政策（与税收和政府支出有关）似乎是促使各国持续长期经济增长的关键。