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Tax reform and public debt instability in developing countries: The trade openness and public revenue instability channels

Sèna Kimm Gnangnon

Economic Analysis and Policy, 2021, vol. 69, issue C, 54-67

Abstract: This article investigates the effect of tax reform – which entails a convergence of developing countries’ tax structure towards that of developed countries – on public debt instability in developing countries. The empirical analysis has shown that a greater extent of tax reform reduces the instability of public debt, including when countries experience lower public revenue instability or when they open-up their economies to international trade. These findings have important policy implications.

Keywords: Tax reform; Public debt instability; Public revenue instability; Trade openness; Developing countries (search for similar items in EconPapers)
JEL-codes: F13 H10 H20 H63 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:69:y:2021:i:c:p:54-67

DOI: 10.1016/j.eap.2020.11.005

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