Dzingirai, C.Stephanus, Ben Kennedy2025-09-302025-09-302025http://hdl.handle.net/11070/4145A thesis submitted in partial fulfilment of the requirements for the Degree of Master of Science in EconomicsThis study investigates the complex relationship between taxation and inflation in Namibia from 1990Q1 to 2023Q4 using Nonlinear Autoregressive Distributed Lag (NARDL) methodologies. The Augmented Dickey-Fuller (ADF) and Phillips Perron (PP) unit root tests suggest that the variables are integrated to order I(0) and I(1). Unlike the traditional ARDL analysis which assumes linear associations, the Brock Dechert-Scheinkman (BDS) and Wald tests revealed an asymmetric association between taxation and inflation in Namibia, justifying the suitability of the NARDL model. The results suggest that positive shocks in taxation have distinct short-term and long-term effects on inflation, challenging the assumption of a symmetrical relationship. Furthermore, only for robustness purposes, the Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) estimates, while exhibiting some variation compared to the NARDL's long-run estimates, suggest a long-run relationship between taxation and inflation. The Vector Error Correction method (VECM) analysis reveals no causal relationship between taxation and inflation in Namibia in the short run but uncovers a long-run relationship. Additionally, the analysis exposes a nuanced relationship between taxation and inflation in Namibia, diverging from previous studies that often assume a linear connection. The study uncovers a long-term, nonlinear nexus between taxation and inflation in Namibia. Therefore,it is recommended that a gradual increase in taxation can effectively mitigate inflationary pressures by curbing excessive spending, and may enable the Bank of Namibia to sustain a stable interest rate environment in NamibiaenTaxationInflationNonlinear autoregressive distributed lagNamibiaFully modified ordinary least squaresDynamic ordinary least squaresVector error correction methodUniversity of NamibiaThesis