Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/161564 
Year of Publication: 
2017
Series/Report no.: 
WIDER Working Paper No. 2017/7
Publisher: 
The United Nations University World Institute for Development Economics Research (UNU-WIDER), Helsinki
Abstract: 
This paper explores the extent to which government revenue is affected by external shocks, and whether these effects are different for resource-rich as compared with non-resource-rich countries. We are particularly interested in the fate of poorer countries, as we assume they will find it more difficult to implement the policies needed to offset the effect of shocks. Based on data from the International Centre for Taxation and Development Government Revenue Dataset for 1980-2010, we measure the elasticity of tax revenue with respect to terms-of-trade shocks. We find that revenue in resource-rich countries is more vulnerable to such shocks. Interestingly, it is above all the richer countries that appear to be adversely affected. Also, resource-rich countries became less vulnerable in the 2000s as compared with previous decades. When we look at the poorer resource-rich countries, we find that a country's general institutional characteristics may not always reflect the quality of its management of natural resources.
Subjects: 
taxes
natural resources
terms-of-trade shocks
developing countries
government revenue
volatility
Persistent Identifier of the first edition: 
ISBN: 
978-92-9256-231-1
Document Type: 
Working Paper

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