Instability of government revenue and expenditure in less developed countries

Lim, David

doi:10.1016/0305-750x(83)90078-5

Cited by 34 publications

(28 citation statements)

References 2 publications

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“…The econometric model is similar to previous studies for the choice of control variables (Lim, ; Bleaney et al ., ; Ebeke & Ehrhart, ).

σ_{i, τ} = α + φ σ_{i, τ - 1} + X_{i, r}^{'} β + γ_{1} R_{i, τ} + γ_{2} R_{i, τ} * V_{i, τ} + θ V_{i, τ} + μ_{i} + η_{τ} + ε_{i, t}

where σ i , τ is the standard deviation of the growth rate of the total tax revenue ratio (excluding grants) over the sub‐period τ .…”

Section: Empirical Analysismentioning

confidence: 83%

Do International Remittances Affect the Level and the Volatility of Government Tax Revenues?

Ebeke

2013

J. Int. Dev.

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This paper examines whether international remittance inflows expand fiscal space in receiving through their positive effects on the level and the stability of government tax revenues. It investigates whether these effects of remittances are conditional on the presence of a value added tax (VAT). Using a large sample of countries, and even after factoring in the endogeneity of remittances and the VAT adoption, this study highlights that remittance inflows increase the level and the stability of government tax revenue ratio in presence of a VAT. Copyright © 2013 John Wiley & Sons, Ltd.

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“…The econometric model is similar to previous studies for the choice of control variables (Lim, ; Bleaney et al ., ; Ebeke & Ehrhart, ).

σ_{i, τ} = α + φ σ_{i, τ - 1} + X_{i, r}^{'} β + γ_{1} R_{i, τ} + γ_{2} R_{i, τ} * V_{i, τ} + θ V_{i, τ} + μ_{i} + η_{τ} + ε_{i, t}

where σ i , τ is the standard deviation of the growth rate of the total tax revenue ratio (excluding grants) over the sub‐period τ .…”

Section: Empirical Analysismentioning

confidence: 83%

Do International Remittances Affect the Level and the Volatility of Government Tax Revenues?

Ebeke

2013

J. Int. Dev.

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“…First, revenue instability seems likely to feed through into expenditure instability [Lim, 1983], in part because of the low contingency reserves which are carried by SSA countries and in part due to constraints on alternative funding sources. Empirically, we have shown that countries with high revenue instability are indeed characterised by high expenditure instability.…”

Section: Concluding Commentsmentioning

confidence: 99%

Tax revenue instability, with particular reference to sub‐Saharan Africa

Bleaney

Gemmell

Greenaway

1995

Journal of Development Studies

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This article examines the temporal instability of tax revenues across a sample of developed and less developed countries. It is shown that instability is especially high in LDCs and is highest in open economies with low per capita income, high output variance and inflationary problems. Even allowing for these factors, revenue instability appears to be particularly high in sub-Saharan Africa.Revenue instability can be expected, via the government budget constraint, to be associated with expenditure instability and/or instability in the sources of deficit finance. Cross-section evidence for LDCs confirms that countries with high tax revenue instability tend also to have high expenditure instability. Time-series evidence for six African countries however, suggests that revenues and expenditures do not move together in a uniform manner, and the direction of causality is generally ambiguous. There is some evidence however that foreign borrowing is used more to finance expenditure increases than to counteract revenue shortfalls.

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“…The extent to which the effect of tax reform on tax revenue instability depends on the degree of development aid volatility is assessed by postulating model , which builds on previous few studies on the determinants of instability of public revenue (Bleaney et al, ; Ebeke & Ehrhart, ; Lim, ). Model is as follows:

italicLog {(italicTAXREVINST)}_{it} = β_{0} + β_{1} italicLog {(italicTAXREVINST)}_{italicit - 1} + β_{2} italicLog {(italicTAXREF)}_{it} + β_{3} italicLog {(italicNATVOL)}_{it} + β_{4} ((), ([], italicLog {(italicTAXREF)}_{it}) * ([], italicLog {(italicNATVOL)}_{it})) + β_{5} italicLog {(italicNAT)}_{it} + β_{6} italicLog {(italicOPEN)}_{it} + β_{7} italicLog {(italicGRVOL)}_{it} + β_{8} italicLog {(italicGDPC)}_{it} + β_{9} {INFL}_{it} + β_{10} italicLog {(italicINFLVOL)}_{it} + β_{11} italicLog {(italicTERMSVOL)}_{it} + σ_{i} + τ_{it}

where the subscript i represents a developing country and t the time period.…”

Section: Model Specification On the Effect Of Tax Reform On Tax Revenmentioning

confidence: 99%

“…On another note, the few existing studies on the instability of public revenue in developing countries (e.g. Bleaney, Gemmell, & Greenaway, ; Ebeke, ; Ebeke & Ehrhart, ; Lim, ) have reported that public revenue instability translates into higher instability of public expenditure, higher instability of both public investment and government consumption, as well as lower public investment. One could therefore question whether in addition to its possible effect on the level of tax revenue, tax reform also helps dampen the instability of public revenue, with a view to ensuring a stable and sustainable public revenue in developing countries.…”

Section: Introductionmentioning

confidence: 99%

Tax Reform and Public Revenue Instability in Developing Countries: Does the Volatility of Development Aid Matter?

Gnangnon

Brun

2019

J of Intl Development

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This paper examines the relationship between tax transition reform, development aid volatility, and public revenue instability in developing countries. Empirical findings show that tax reform exerts a negative effect on tax revenue instability, and the magnitude of this negative effect diminishes as the degree of development aid volatility increases. Specifically, beyond a certain level of development aid volatility, tax reform enhances tax revenue instability. Overall, these findings suggest that higher development aid flows to developing countries should be accompanied by a lower aid volatility so as to ensure that tax reform would generate lower tax revenue instability in recipient countries. © 2019 John Wiley & Sons, Ltd.

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Instability of government revenue and expenditure in less developed countries

Cited by 34 publications

References 2 publications

Do International Remittances Affect the Level and the Volatility of Government Tax Revenues?

Do International Remittances Affect the Level and the Volatility of Government Tax Revenues?

Tax revenue instability, with particular reference to sub‐Saharan Africa

Tax Reform and Public Revenue Instability in Developing Countries: Does the Volatility of Development Aid Matter?

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