Exchange Rate Volatility and Tax Revenue Performance in Sub-Saharan Africa

Isaac Kwesi Ofori (), Camara Kwasi Obeng and Peter Yeltulme Mwinlaaru ()
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Peter Yeltulme Mwinlaaru: University of Cape Coast

A chapter in The Palgrave Handbook of Africa’s Economic Sectors, 2022, pp 1039-1062 from Springer

Abstract: 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% 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 1984–2017 for 21 countries, we provide empirical evidence from the panel autoregressive distributed lag technique to show that exchange rate volatility is directly harmful to tax revenue performance, and indirectly through trade openness.

Keywords: Cointegration; Exchange rate volatility; GARCH; Sub-Saharan Africa; Tax revenue (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-75556-0_41

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DOI: 10.1007/978-3-030-75556-0_41

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