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Tying Governments' Hands in Commodity Taxation

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  • Schuknecht, Ludger

Abstract

In the 1970s, taxation of 'windfall' profits from primary products and intervention in trade and production tempted governments into expansionary fiscal policies, whilst stifling the private sector and depressing growth. However, the experience of the mid-1990s coffee boom has so far been more favourable: those African countries which liberalised and left a large share of the 'windfall' with the private sector, and which committed themselves to fiscal austerity via adjustment programmes, have shown better results in terms of fiscal stability, private sector responses and economic growth than countries which did not reform. These findings suggest that constraints on discretionary government policies are desirable, and that domestic institutions and international commitments could serve this purpose. Copyright 1999 by Oxford University Press.

Suggested Citation

  • Schuknecht, Ludger, 1999. "Tying Governments' Hands in Commodity Taxation," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 8(2), pages 152-181, July.
  • Handle: RePEc:oup:jafrec:v:8:y:1999:i:2:p:152-81
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    References listed on IDEAS

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    1. Tanzi, Vito, 1986. "Fiscal Policy Responses to Exogenous Shocks in Developing Countries," American Economic Review, American Economic Association, vol. 76(2), pages 88-91, May.
    2. Lane, Philip R & Tornell, Aaron, 1996. "Power, Growth, and the Voracity Effect," Journal of Economic Growth, Springer, vol. 1(2), pages 213-241, June.
    3. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, vol. 22(9), pages 1325-1343, September.
    4. Sanjeev Gupta & Kenneth M. Miranda, 1991. "Commodity Booms and Government Expenditure Responses," IMF Working Papers 91/44, International Monetary Fund.
    5. Schuknecht, Ludger, 1996. "Political Business Cycles and Fiscal Policies in Developing Countries," Kyklos, Wiley Blackwell, vol. 49(2), pages 155-170.
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    Cited by:

    1. Gylfason, Thorvaldur, 2001. "Nature, Power, and Growth," Scottish Journal of Political Economy, Scottish Economic Society, vol. 48(5), pages 558-588, November.
    2. Akiyama, Takamasa & Baffes, John & Larson, Donald F. & Varangis, Panos, 2003. "Commodity market reform in Africa: some recent experience," Economic Systems, Elsevier, vol. 27(1), pages 83-115, March.
    3. Romero-Ávila, Diego, 2009. "Multiple Breaks, Terms of Trade Shocks and the Unit-Root Hypothesis for African Per Capita Real GDP," World Development, Elsevier, vol. 37(6), pages 1051-1068, June.
    4. Paul Collier & Jan Willem Gunning, 1999. "Why Has Africa Grown Slowly?," Journal of Economic Perspectives, American Economic Association, vol. 13(3), pages 3-22, Summer.
    5. Dehn, Jan, 2000. "The effects on growth of commodity price uncertainty and shocks," Policy Research Working Paper Series 2455, The World Bank.

    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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