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

Chrysost Bangake (), Désiré Avom, Hermann Ndoya and Prince Adouma
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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
Prince Adouma: CERME, Faculty of Economics and Management

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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.

Keywords: Remittances; tax revenues; nonlinear relationship; panel thres (search for similar items in EconPapers)
Date: 2024-06-30
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Published in Applied Economics, 2024, pp.1-17. ⟨10.1080/00036846.2024.2374458⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04814462

DOI: 10.1080/00036846.2024.2374458

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