Testing of the Formal Statistical Validity of a Tax Model of the Investment Demand in the Republic of Macedonia

Abstract

This article is aimed for presentation of the formal testing steps of the statistical validity
of a multiple regression model that explains the formation of the investment demand in
the Republic of Macedonia. This specifically developed model is based upon the
concept of the “cost of capital”, which is known as one of the most traditional
approaches that can effectively explain the formation of the capital demand in a certain
country, especially with interaction of changes in the tax code. Therefore, it is
considered as an appropriate model for the purpose to unveil whether the country’s tax
rates play or not a significant role for creation of the domestic demand for investment.
Precisely, the statistical analysis of the presented model confirms its formal validity,
since all the formal assumptions regarding the residuals of the multiple regression are
generally satisfied. This also ensures relevance and formal justification of the chosen
model, for its further exploitation for empirical research, while the results of this
research will be published in a separate article.