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The fiscal policy plays a crucial role in a country's economic growth and development. The main aim of this paper is to analyze the fiscal policy in general and to estimate the impact of direct and indirect taxes on economic growth in particular in case of Kosovo. To achieve the main aim of this paper a broadly national and international literature is reviewed and discussed thus the Pearson Correlation and Ordinary Least Square (OLS) regression model have been modified and adapted to estimate the relationship and the impact of direct and indirect taxes on economic growth in Kosovo. The data used is secondary data taken from the Tax Administration of Kosovo, the Ministry of Finance and the Kosovo Agency of Statistics. For model estimation the IBM SPSS program is used. This study concludes that budget revenues from direct and indirect taxes mark an increasing and positive trend in case of Kosovo. Based on the Pearson Correlations we conclude that direct taxes are strongly and positively correlated to Gross Domestic Product however the results of OLS regression in our circumstances show no significance of the independent variables that means that direct and indirect taxes have no impact on economic growth of Kosovo. The paper comes with some key conclusions and further recommendations.
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