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Fiscal policy volatility and capital flight

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  • Ablam Estel Apeti

    (LEO - Laboratoire d'Économie d'Orleans [2022-...] - UO - Université d'Orléans - UT - Université de Tours - UCA - Université Clermont Auvergne)

Abstract

In this paper, we analyse the effect of fiscal policy volatility on capital flight. Based on a sample of 27 African countries over the period 1970–2018 and using System generalised method (GMM) of moments, we show that fiscal policy volatility increases capital flight. Specif‐ically, our baseline results indicate that an increase in fiscal policy volatility by 1% increases capital flight by 1.4%. In other words, an increase in fiscal policy volatility by 100% increases capital flight by 140% or by 40% above the increase in the cause, that is, fiscal policy volatility. These results are robust to additional control variables, alternative methods, samples, and specifications, and may vary with the initial level of capital flight.

Suggested Citation

  • Ablam Estel Apeti, 2024. "Fiscal policy volatility and capital flight," Post-Print hal-04712777, HAL.
    • Handle: RePEc:hal:journl:hal-04712777
    DOI: 10.1111/ecot.12416
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