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Tax Revenue Downturns: Anatomy and Links to Imports

Author

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  • Kun Li
  • Pablo Lopez Murphy

Abstract

We study historical tax revenue downturn episodes—where tax revenue-to-GDP ratios decline sharply—and explore the link between tax revenues and imports. We document that downturn episodes of at least 1 percentage point of GDP in one year are common. The tax types that account for these episodes are different in advanced, emerging and developing, and oil producing countries. We find that tax revenue downturns and import contractions have a statistically significant link. Finally, we show that changes in imports are a statistically significant determinant of changes in tax revenues even when controlling for changes in the output gap and in the terms of trade.

Suggested Citation

  • Kun Li & Pablo Lopez Murphy, 2010. "Tax Revenue Downturns: Anatomy and Links to Imports," IMF Working Papers 2010/138, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2010/138
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    Citations

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    Cited by:

    1. Sena Kimm GNANGNON, 2012. "An analysis of duration dependence of government revenue expansions and contractions in Developing Countries," Working Papers 201229, CERDI.
    2. Raed A. M. Iriqat & Ahmad N. H. Anabtawi, 2016. "GDP and Tax Revenues-Causality Relationship in Developing Countries: Evidence from Palestine," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(4), pages 54-62, April.
    3. Sèna Kimm Gnangnon, 2012. "An analysis of duration dependence of government revenue expansions and contractions in Developing Countries," Working Papers halshs-00722083, HAL.
    4. Islam, Roumeen, 2013. "Macroeconomic context and fiscal policy : Europe and Central Asia during 2000-2012," Policy Research Working Paper Series 6621, The World Bank.

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