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Effect of Exchange Rate Volatility on Tax Revenue Performance in Sub-Saharan Africa

Author

Listed:
  • Isaac K. Ofori

    (University of Insubria, Varese, Italy)

  • Camara K. Obeng

    (University of Cape Coast, Cape Coast, Ghana)

  • Peter Y. Mwinlaaru

    (University of Cape Coast, Cape Coast, Ghana)

Abstract

Efforts to spur growth in sub-Sahara Africa have been intensified amid structural and institutional constraints. Tax revenue, the chief source of funding for developmental purposes in SSA remains low and unstable. In fact, the SSA sub-region finds it difficult generating tax revenue up to 20 per cent of GDP. One factor that has not caught the attention of policymakers in terms of its impact on tax revenue performance is exchange rate volatility. Using macrodata spanning 1984 to 2017 for 21 countries, we provide empirical evidence from a panel autoregressive distributed lag technique to show that exchange rate volatility is directly harmful to tax revenue performance, and indirectly through trade openness.

Suggested Citation

  • Isaac K. Ofori & Camara K. Obeng & Peter Y. Mwinlaaru, 2021. "Effect of Exchange Rate Volatility on Tax Revenue Performance in Sub-Saharan Africa," Working Papers of the African Governance and Development Institute. 21/031, African Governance and Development Institute..
    • Handle: RePEc:agd:wpaper:21/031
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    Cited by:

    1. Isaac K. Ofori & Simplice A. Asongu, 2021. "Foreign Direct Investment, Governance and Inclusive Growth in Sub-Saharan Africa," Research Africa Network Working Papers 21/038, Research Africa Network (RAN).
    2. Isaac K. Ofori & Pamela E. Ofori & Simplice A. Asongu, 2021. "Towards Efforts to Enhance Tax Revenue Mobilisation in Africa: Exploring Synergies between Industrialisation and ICTs," Research Africa Network Working Papers 21/058, Research Africa Network (RAN).
    3. Pamela E. Ofori & Isaac K. Ofori & Simplice A. Asongu, 2022. "Towards efforts to enhance tax revenue mobilisation in Africa: Exploring the interaction between industrialisation and digital infrastructure," Working Papers of the African Governance and Development Institute. 22/045, African Governance and Development Institute..

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    More about this item

    Keywords

    Cointegration; Exchange Rate Volatility; GARCH; Sub-Sahara Africa; Tax Revenue;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • F6 - International Economics - - Economic Impacts of Globalization
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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