Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/231264
Authors: 
Ofori, Isaac Kwesi
Obeng, Camara Kwasi
Armah, Mark Kojo
Year of Publication: 
2018
Citation: 
[Journal:] Cogent Economics & Finance [ISSN:] 2332-2039 [Volume:] 6 [Issue:] 1 (Article No.:) 1537822
Abstract: 
The need for the Ghanaian government to generate enough revenue for development is becoming increasingly crucial in this era of slow growth, growing unemployment, and high debt. However, tax revenue performance over the years reveals an unstable pattern. One key factor that has been overlooked in the literature in terms of the determinants of tax revenue is exchange rate volatility. Coming from the background of volatility in Ghana’s exchange rate, could it be the reason for the instability in the trend of tax revenue? This question is the subject matter of this study. To estimate the effect of exchange rate volatility on tax revenue, the study employed the Auto Regressive Distributed Lag (ARDL) technique after the yearly exchange rate volatilities had been generated using the GARCH(1,1) method. The results of the study suggest that exchange rate volatility has a deleterious effect on tax revenue both in the short-run and long-run but the effect is more pronounced in the long-run than in the short-run. The study recommends that the bank of Ghana step-up its exchange rate stabilization efforts to reduce exchange rate risk imposed on international trade players.
Subjects: 
Exchange rate volatility
GARCH
Tax revenue
Foreign aid
Ghana
Africa
JEL: 
A10
E6
F1
F2
F3
F4
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by/4.0/
Document Type: 
Article
Document Version: 
Published Version

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