Commodity price volatility and tax revenue: Evidence from developing countries

Helene Ehrhart and S. Guerineau

Working papers from Banque de France

Abstract: In this paper we assess the impact of commodity price volatility on tax revenues, while existing works were concentrated on its effect on economic growth. Our empirical analysis is carried out on 80 developing countries over 1980-2008. We compute country-specific indices which measure the volatility of the international price of 41 commodities in the sectors of agriculture, minerals and energy. We find robust evidence that tax revenues in developing countries are hurt by the volatility of commodity prices. More specifically, the volatility of import prices decreases revenues from international trade tax while the volatility of export prices reduces revenues from income tax. We also show that this negative effect on tax revenues is not homogenous between countries. First, the export price volatility impact is negative except for oil exporters for whom it is null. Second, the magnitude of the negative impact of import price volatility on tax revenues depends on the tariff structure, i.e. is greater in countries where tariff dispersion is high.

Keywords: Price Volatility; Tax revenues; Commodities; Developing economies. (search for similar items in EconPapers)
JEL-codes: E62 F10 O13 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2013
New Economics Papers: this item is included in nep-acc, nep-agr, nep-mac, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Commodity price volatility and Tax revenues: Evidence from developing countries (2012)
Working Paper: Commodity price volatility and Tax revenues: Evidence from developing countries (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:423

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