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Tax Buoyancy in Sub‐Saharan Africa: An Empirical Exploration
Author(s) -
Jalles Joao Tovar
Publication year - 2017
Publication title -
african development review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.654
H-Index - 32
eISSN - 1467-8268
pISSN - 1017-6772
DOI - 10.1111/1467-8268.12234
Subject(s) - economics , buoyancy , volatility (finance) , tax revenue , fiscal sustainability , monetary economics , econometrics , macroeconomics , fiscal policy , thermodynamics , physics
In this paper we provide short‐ and long‐run tax buoyancy estimates for 37 sub‐Saharan African countries for the period 1990–2015. By means of Mean Group and Pooled Mean Group estimators, we find that in 19 out of 37 countries growth has improved fiscal sustainability over time. Moreover, in only 11 out of 37 countries the tax system has acted as a good automatic stabilizer; Furthermore, tax buoyancy seems to be larger during contractions than during times of economic expansions. Finally, countries with a relatively larger agricultural sector (human capital index and stronger institutions) show a lower (higher) long‐run buoyancy coefficient estimate, while high inflation and economic volatility reduce that ability to maximize tax collection.