Analysis on tax elasticity in China based on ECM and GM(1,1) model

By collecting the data on China´s tax revenue and GDP since 1978, using the methods of time series and econometrics to measure and analyze the tax elasticity as well as setting up an error correction model, the authors find out that during 1978-1994 China´s long-term tax elasticity is 0.4, less than its short-term elasticity of 1.84; since 1995, China´s tax elasticity has changed dramatically with the long-term tax elasticity being 1.66, 0.72 larger than the short-term elasticity. At last, on the grey system theory, the GM (1, 1) model of the tax elasticity is established to predict those of in 2008 and 2009.