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An instrumental variables approach to estimating tax revenue elasticities: Evidence from Sub-Saharan Africa

  • Brückner, Markus

This paper exploits the significant response of real GDP growth of Sub-Saharan African countries to exogenous international commodity price and rainfall shocks to construct instrumental variables estimates of the tax revenue elasticity IV estimates yield that a 1% increase in GDP increases tax revenues by up to 2.5%.

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Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 98 (2012)
Issue (Month): 2 ()
Pages: 220-227

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Handle: RePEc:eee:deveco:v:98:y:2012:i:2:p:220-227
Contact details of provider: Web page: http://www.elsevier.com/locate/devec

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  1. Dhaneshwar Ghura, 1998. "Tax Revenue in Sub-Saharan Africa; Effects of Economic Policies and Corruption," IMF Working Papers 98/135, International Monetary Fund.
  2. Guido Wolswijk, 2009. "The short- and long-run tax revenue response to changes in tax bases," Economics Bulletin, AccessEcon, vol. 29(3), pages 1960-1970.
  3. Deaton, Angus & Miller, Ron, 1996. "International Commodity Prices, Macroeconomic Performance and Politics in Sub-Saharan Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 5(3), pages 99-191, October.
  4. Mehmet Serkan Tosun & Sohrab Abizadeh, 2005. "Economic growth and tax components: an analysis of tax changes in OECD," Applied Economics, Taylor & Francis Journals, vol. 37(19), pages 2251-2263.
  5. Angus Deaton, 2005. "ERRATUM: Measuring Poverty in a Growing World (or Measuring Growth in a Poor World)," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 395-395, May.
  6. Paul van den Noord, 2000. "The Size and Role of Automatic Fiscal Stabilizers in the 1990s and Beyond," OECD Economics Department Working Papers 230, OECD Publishing.
  7. Baunsgaard, Thomas & Keen, Michael, 2010. "Tax revenue and (or?) trade liberalization," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 563-577, October.
  8. Edward Miguel & Shanker Satyanath & Ernest Sergenti, 2004. "Economic Shocks and Civil Conflict: An Instrumental Variables Approach," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 725-753, August.
  9. Paul Cashin & Hong Liang & C. John McDermott, 2000. "How Persistent Are Shocks to World Commodity Prices?," IMF Staff Papers, Palgrave Macmillan, vol. 47(2), pages 2.
  10. Markus Bruckner & Antonio Ciccone, 2010. "International Commodities Prices, Growth and the Outbreak of Civil War in Sub-Saharan Africa," Working Papers 1008, BBVA Bank, Economic Research Department.
  11. Angus Deaton, 1999. "Commodity Prices and Growth in Africa," Journal of Economic Perspectives, American Economic Association, vol. 13(3), pages 23-40, Summer.
  12. Christopher Adam & David Bevan, 2000. "Exchange Rate Regimes and Revenue Performance in Sub-Saharan Africa," Economics Series Working Papers 9, University of Oxford, Department of Economics.
  13. Talvi, Ernesto & Vegh, Carlos A., 2005. "Tax base variability and procyclical fiscal policy in developing countries," Journal of Development Economics, Elsevier, vol. 78(1), pages 156-190, October.
  14. Sobel, Russell S. & Holcombe, Randall G., 1996. "Measuring the Growth and Variability of Tax Bases over the Business Cycle," National Tax Journal, National Tax Association, vol. 49(4), pages 535-52, December.
  15. Markus Brückner & Antonio Ciccone, 2009. "International Commodity Prices, Growth, and the Outbreak of Civil War in Sub-Saharan Africa," Working Papers 2009-37, FEDEA.
  16. Simon Johnson & William Larson & Chris Papageorgiou & Arvind Subramanian, 2009. "Is Newer Better? Penn World Table Revisions and Their Impact on Growth Estimates," NBER Working Papers 15455, National Bureau of Economic Research, Inc.
  17. Shamsuddin Tareq & Andrew Berg & Victor Duarte Lledo & Antonio Spilimbergo & Rolando Ossowski & Irene Yackovlev & Norbert Funke & Alejandro Hajdenberg & Martin Schindler, 2009. "Fiscal Policy in Sub-Saharan Africa in Response to the Impact of the Global Crisis," IMF Staff Position Notes 2009/10, International Monetary Fund.
  18. Angus Deaton, 2004. "Measuring poverty in a growing world (or measuring growth in a poor world)," Working Papers 178, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
  19. Heston, Alan, 1994. "A brief review of some problems in using national accounts data in level of output comparisons and growth studies," Journal of Development Economics, Elsevier, vol. 44(1), pages 29-52, June.
  20. Donald Bruce & William F. Fox & M.H. Tuttle, 2006. "Tax Base Elasticities: A Multi-State Analysis of Long-Run and Short-Run Dynamics," Southern Economic Journal, Southern Economic Association, vol. 73(2), pages 315–341, October.
  21. Salvador Barrios & Luisito Bertinelli & Eric Strobl, 2010. "Trends in Rainfall and Economic Growth in Africa: A Neglected Cause of the African Growth Tragedy," The Review of Economics and Statistics, MIT Press, vol. 92(2), pages 350-366, May.
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