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Heterogeneous Aid Effects on Tax Revenues: Accounting for Government Stability in WAEMU Countries

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  • Djedje Hermann Yohou

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)

  • Michaël Goujon

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)

  • Wautabouna Ouattara

    (UAC - University of Abidjan Cocody - University of Abidjan Cocody)

Abstract

We examine the heterogeneous effects due to government stability of foreign aid on tax revenues in the West African Economic and Monetary Union countries over the period 1986-2010. We show that the tax effects of aid are gradual and varying across countries according to the level of government stability. The Panel Smooth Threshold Regressions indicate that at low levels of government stability, aid negatively affects tax performances. At high levels, it encourages tax collection. Consequently, we provide estimates of individual time varying coefficients of aid effects. In general, the positive effects are marked since the mid of 1990 decade. However, decomposing aid into its forms of loans, technical and non-technical grants provides nuanced results.

Suggested Citation

  • Djedje Hermann Yohou & Michaël Goujon & Wautabouna Ouattara, 2015. "Heterogeneous Aid Effects on Tax Revenues: Accounting for Government Stability in WAEMU Countries," Working Papers halshs-01138159, HAL.
    • Handle: RePEc:hal:wpaper:halshs-01138159
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01138159
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    More about this item

    Keywords

    foreign aid; Government Stability; Tax revenue; PSTR; WAEMU;
    All these keywords.

    JEL classification:

    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • F35 - International Economics - - International Finance - - - Foreign Aid

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