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Do remittances increase tax revenues in developing countries? Evidence from the threshold regression models

Author

Listed:
  • Chrysost Bangake

    (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique)

  • Désiré Avom

    (CEREG, Faculty of Economics and Management)

  • Hermann Ndoya
  • Prince Adouma

    (CERME, Faculty of Economics and Management)

Abstract

This paper provides original econometric evidence on the effect of remittances on tax revenues in developing countries. In applying the system generalized methods of moments (SGMM) and the panel threshold regression method to a sample of 83 developing countries over the period 1990–2019, we find two major results. First, remittances positively and significantly affect tax revenues in developing countries. Second, as far as the nonlinear relationship is concerned, we find two extreme regimes with a smooth shift characterizing the remittances-tax revenue nexus, with respect to conditional variables; remittance effects are positive and significant under the first regime and negative and significant under the second. Furthermore, our findings show that the nonlinear relationship between remittances and tax revenues depends on the levels of informal economy, corruption, and growth volatility.

Suggested Citation

  • Chrysost Bangake & Désiré Avom & Hermann Ndoya & Prince Adouma, 2024. "Do remittances increase tax revenues in developing countries? Evidence from the threshold regression models," Post-Print hal-04814462, HAL.
    • Handle: RePEc:hal:journl:hal-04814462
    DOI: 10.1080/00036846.2024.2374458
    as

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