Taxation and Political Stability

Monetary Policy and Governance, Commodity Price Volatility and Tax Revenues in Sub-Saharan Africa

“…Regarding the objective of this study and following Medina (2021), Majumder, Raghavan and Vespignani (2022), and García-Albán, González-Astudillo and Vera-Avellán (2021), we modified the equation (1) by adding the CPV as an explanatory variable follows: In line with recent studies in developing countries, governments’ tax ratios are affected by the quality of governance (GOV) and the degree of economic digitalization (DIG). Torgler (2005) argued that good quality governance can raise tax revenues since citizens are more likely to improve their tax compliance.…”

“…In the first country study group, Chuku and Simpasa (2018) found a significant response of macroeconomic variables to CPV fluctuations in Africa. Based on Bayesian VAR modeling, García-Albán, González-Astudillo and Vera-Avellán (2021) showed that of oil, significantly affects economic activity and all budgetary variables, including tax revenues in Guinea Equatorial.…”

“…The novelty of this research is threefold. On a practical level, we reexamine the effects of CPV on revenues mobilization following existent literature by controlling for governance and institutional variables (Diakite et al 2019 ;Estrada, Mutascu and Tiwari 2014). Second, we investigate the mediating role of governance and institutional quality in mitigating the detrimental effects of CPV on revenue mobilization.…”

“…Moreover, it's worth noting that the quality of institutions matters in mitigating the detrimental effect of CPV on tax revenues. Indeed, the positive impacts of institutional quality on revenue mobilization have been well documented in the economic literature (Estrada, Mutascu and Tiwari 2014;Torgler 2005). Equally, there is a growing literature highlighting the mediating role of institutional quality in the achievement of economic outcomes such as economic growth (Duodu andBaidoo 2022 andHoungbedji andAntonakakis et al 2017) and fiscal policy (Kaya and Kaya 2020).…”

“…These authors argue that the heterogeneity in the level of tax revenue is explained by countries’ natural resource endowments tax evasion, and the level of the shadow economy (Thiao and Ouonogo 2021; Zídková 2014). The second and most recent strand of the literature focuses on the fiscal effects of CPV and found heterogeneous effects, depending on countries’ characteristics (Da and Diarra 2022; García-Albán, González-Astudillo and Vera-Avellán 2021; Majumder, Raghavan and Vespignani 2022). This contradiction could be due to misspecification and methodological issues.…”