Commodity Price Volatility and Tax Revenue: Evidence from Developing Countries

Ehrhart, Hélène; Guérineau, Samuel

doi:10.2139/ssrn.2225300

Cited by 26 publications

(16 citation statements)

References 52 publications

(37 reference statements)

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“…The consequence is that the prices of agricultural raw materials are never equal to marginal costs in the long-term and therefore have no relation to the production costs of farmers (Boussard 2010;Tothova 2011). This instability of agricultural prices causes a serious harm to farmers in the terms of well-being (Matthews 2010;OCDE 2010;FAO et al 2011;Onour and Sergi 2011;Rapsomanikis and Mugera 2011), but also to the economies of developing countries which depend on agricultural raw materials (Gillson et al 2004;FAO et al 2011;Luciani 2011;Rapsomanikis and Mugera 2011;Ehrhart and Guerineau 2012). Then, the storage and marketing boards are sometime used as a solution to stabilize markets and to avoid large fluctuations Boussard 2011, 2012).…”

mentioning

confidence: 99%

Volatility and stabilization of the price of coffee and cocoa in Côte d'Ivoire

Malan¹

2013

AGR ECON-CZECH

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Th e aim of this paper was to study the coff ee and cocoa price volatility in Côte d'Ivoire and to understand the mechanism of price stabilization. Th us, this paper shows that the international prices and the farm gate prices of these two products are strongly dispersed around their respective average, from one year to another and within each year. Th is paper proposes a model of partial stabilization which makes it possible to highlight an alternate mechanism of the coff ee and cocoa price stabilization which is relatively effi cient compared to the mechanism which currently exists. It shows that a marketing board in the Ivorian coff ee and cocoa sector, which constitutes a buff er stock and uses it in a strategic way, has the advantage of reducing signifi cantly the volatility of the international price and the farm gate price.Key words: farm gate price, international price, price fl uctuation, buff er stock, cocoa and coff ee markets 1 The vertical coordination was built up and strengthened by the stabilization system through an administrative scheme called the barème (scale).

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confidence: 99%

Volatility and stabilization of the price of coffee and cocoa in Côte d'Ivoire

Malan¹

2013

AGR ECON-CZECH

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“…The impact of natural resources on the volatility of economic growth is a well-established fact (for instance, see Arezki, Patillo, Quintyn, & Zhu, 2012;Davis, 2013;Papyrakis, 2017;Sachs & Warner, 2001;van der Ploeg & Poelhekke, 2017). Many observations point to a strong relationship between growth volatility and vulnerability to shocks (Collier & Venables, 2008;Ehrhart & Guerineau, 2013;Frankel, 2010;Humphreys, Sachs, & Stiglitz, 2007;Ross, 2012b;van der Ploeg & Poelhekke, 2008;van der Ploeg & Venables, 2012). With reference to LICs, the IMF observes: 'research suggests that external shocks contribute to large output losses and protracted growth slowdowns in LICs […] A number of LICs face fragilities defined by their weak institutions, ongoing or recent conflict, and high poverty levels, which put them in a weak position to cope with the effects of shocks and to mediate their social impact' (IMF, 2013, pp.…”

Section: Literature Reviewmentioning

confidence: 99%

Does the Political Resource Curse Affect Public Finance? The Vulnerability of Tax Revenue in Resource‐Dependent Countries

Haldenwang

Ivanyna²

2018

J of Intl Development

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This paper explores the extent to which government revenue is affected by external shocks and whether these effects are different for resource-dependent (RD) as compared with non-RD countries. We are particularly interested in the fate of poorer countries, as we assume they will find it more difficult to implement the policies needed to offset the effect of shocks. Based on data from the International Centre for Taxation and Development Government Revenue Dataset for 1980-2010, we measure the elasticity of tax revenue with respect to terms-of-trade shocks. We find that revenue in RD countries is more vulnerable to such shocks. It is above all the richer countries that appear to be adversely affected, compared with their non-RD counterparts. In contrast, the difference between RD and non-RD countries is less pronounced in the group of poorer countries. We also find that resource-dependent countries became less vulnerable in the 2000s as compared with previous decades. At the same time, political regime type does not seem to matter for the vulnerability of government revenue in these countries.

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“…Revenue instability in developing countries is likely to have adverse effects on fiscal and even macroeconomic performance (Lensink / Morrissey 2000;IMF 2003;Ehrhart / Guerineau 2013). Above all, it is likely to affect spending: specifically, if unanticipated shortfalls in tax revenue cannot be compensated from other sources (such as aid or borrowing), expenditure may be reduced and this can have adverse impacts on the economy.…”

Section: Exogenous Shocks and Vulnerabilitymentioning

confidence: 99%

“…Few studies have specifically analysed tax revenue instability in developing countries, either in terms of determinants or consequences (Ehrhart / Guerineau 2013). The few that have addressed tax instability in sub-Saharan Africa (SSA) focus on the consequences rather than determinants.…”

Section: Exogenous Shocks and Vulnerabilitymentioning

confidence: 99%

“…In this context, the notion of fiscal space and the capacity of states to mobilise additional revenues are highlighted. Following this discussion, it is fair to assume that those factors that affect the tax performance of countries also have a significant effect on the sensitivity of tax revenue facing exogenous shocks.Revenue instability in developing countries is likely to have adverse effects on fiscal and even macroeconomic performance (Lensink / Morrissey 2000; IMF 2003;Ehrhart / Guerineau 2013). Above all, it is likely to affect spending: specifically, if unanticipated shortfalls in tax revenue cannot be compensated from other sources (such as aid or borrowing), expenditure may be reduced and this can have adverse impacts on the economy.…”

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confidence: 99%

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Assessing the tax systems' risk and efficiency in Russian regions at different levels of the budget system

Малкина¹,

Balakin²

2017

RETP

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− For the whole sample of lower-income countries, ER pressure has a significant negative effect on trade and income tax. In contrast, its effect is negative yet not significant on indirect taxes (goods and services tax), and practically zero on non-tax revenue. The effect is particularly strong and significant in non-democratic as well as in non-resource-rich countries. Apparently, these groups experience more difficulties in counteracting the impact of ER pressure shocks. − Terms-of-trade shocks have significant negative effects on non-tax revenue. The reason is perhaps that these shocks are likely to reduce profits of public enterprises that act as commodity exporters. The effect is negative and significant for all sub-groups except democracies, but stronger for non-resource-rich compared to resource-rich countries. Terms-of-trade shocks also affect income tax revenue in non-democratic and non-resource-rich countries. − Natural disaster intensity affects mostly trade and income taxes, although the coefficient is not significant in any specification.All in all it can be inferred that non-democratic and non-resource-rich countries are particularly vulnerable to shocks affecting income taxes and non-tax revenue. In the case of resource-rich countries, no clear patterns emerge: their revenue structure, though more volatile than that of non-resource-rich countries due to a higher dependence on non-tax revenue, could be less vulnerable to external shocks. At least, there is no robust evidence pointing to volatility of revenue from natural resources being directly connected to increased vulnerability vis-à-vis shocks analysed in this report. This finding Study on the vulnerability and resilience factors of tax revenues in developing countriesFinal Report AETS Consortium -November 2013 4is somewhat unexpected, as conventional wisdom and the literature on rent incomes from (principally) oil would suggest resource-rich economies to be particularly vulnerable to global price and capital shocks. From the present study we get the impression that it is much more the non-resource-rich countries we should be worried about.The findings indicate that vulnerability to shocks should not be regarded exclusively as an issue of major adverse events hitting an economy. It may be important for governments, donors and international organisations to prepare for such events and to develop the appropriate financial tools to deal with them. But it is also important to keep in mind that minor events also have significant effects on revenue and that long-term structural reforms (in particular regarding income tax and non-tax revenue) are a necessary ingredient of any strategy targeting vulnerability of revenue in developing countries. In this context, a broad tax portfolio could contribute to making total revenue less susceptible to individual shocks. Further, the better performance of democracies suggests that reforms pointing to accountability, transparency and rule of law could have an important positive effect on revenue resilience, as g...

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Commodity Price Volatility and Tax Revenue: Evidence from Developing Countries

Cited by 26 publications

References 52 publications

Volatility and stabilization of the price of coffee and cocoa in Côte d'Ivoire

Volatility and stabilization of the price of coffee and cocoa in Côte d'Ivoire

Does the Political Resource Curse Affect Public Finance? The Vulnerability of Tax Revenue in Resource‐Dependent Countries

Assessing the tax systems' risk and efficiency in Russian regions at different levels of the budget system

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