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

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  • Sèna Kimm Gnangnon
  • Jean‐François Brun

Abstract

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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  • Sèna Kimm Gnangnon & Jean‐François Brun, 2019. "Tax Reform and Public Revenue Instability in Developing Countries: Does the Volatility of Development Aid Matter?," Journal of International Development, John Wiley & Sons, Ltd., vol. 31(8), pages 764-785, November.
    • Handle: RePEc:wly:jintdv:v:31:y:2019:i:8:p:764-785
    DOI: 10.1002/jid.3436
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    Cited by:

    1. Gnangnon, Sèna Kimm, 2022. "Internet, Participation in International Trade, and Tax Revenue Instability," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 37(2), pages 267-315.
    2. Gnangnon, Sèna Kimm, 2023. "Productive capacities, structural economic vulnerability and fiscal space volatility in developing countries," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 45(3), pages 25-48.
    3. Gnangnon, Sèna Kimm, 2021. "Tax reform and public debt instability in developing countries: The trade openness and public revenue instability channels," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 54-67.
    4. Panika Jain & Samaresh Bardhan, 2023. "Energy aid volatility across developing countries: a disaggregated sectoral analysis," International Economics and Economic Policy, Springer, vol. 20(3), pages 457-483, July.

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