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Is Aid Unfriendly to Tax? African Evidence of Heterogeneous Direct and Indirect Effects

Author

Listed:
  • Djedje Hermann YOHOU
  • Michaël GOUJON

    (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

  • Bertrand LAPORTE

    (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

  • Samuel GUERINEAU

    (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

Abstract

We explore the heterogeneous effects together with the transmission channels of aid on tax revenues in 47 African countries over 1990-2011 using a panel smooth threshold regression model and two alternative tax datasets from IMF and ICTD. We find that aid enhances tax revenues with decreasing returns for a threshold of 6.3% and 23% of GNI for total taxes and non-resource taxes respectively. Aid effect varies across countries and over time, but, on average, is positive. Moreover, we evidence that aid conditions the impact of the level of development, trade, institutions and resource wealth on tax.

Suggested Citation

  • Djedje Hermann YOHOU & Michaël GOUJON & Bertrand LAPORTE & Samuel GUERINEAU, 2016. "Is Aid Unfriendly to Tax? African Evidence of Heterogeneous Direct and Indirect Effects," Working Papers 201608, CERDI.
  • Handle: RePEc:cdi:wpaper:1811
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    More about this item

    Keywords

    Revenues; Tax data; Africa;
    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
    • F35 - International Economics - - International Finance - - - Foreign Aid

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