Effects of the Tax Transition Reform on the Real Exchange Rate through the Trade Openness Channel in Developing Countries

• 영문명: Effects of the Tax Transition Reform on the Real Exchange Rate through the Trade Openness Channel in Developing Countries
• 발행기관: 세종대학교 경제통합연구소
• 저자명: Sèna Kimm Gnangnon
• 간행물 정보: 『Journal of Economic Integration』제38권 제1호, 115~146쪽, 전체 32쪽
• 주제분류: 경제경영 > 경제학
• 파일형태: PDF
• 발행일자: 2023.03.31

영문 초록

International financial institutions have advised developing countries to implement a reform of their tax revenue structure to reduce their dependence on international trade tax revenue, for the benefit of domestic tax revenue. This study examines the effect of this type of tax reform on the real exchange rate through the trade openness channel. It defines tax reform (also known as “tax transition reform”) as a process that involves the convergence of developing countries' tax structures toward the tax structure of developed countries (given the weak dependence of the latter's tax structure on international trade tax revenue). The analysis is conducted using an unbalanced panel dataset of 107 countries from 1980-2019, and the two-step system-generalized method of moments approach. The findings show that tax reform causes real exchange rate depreciation, with the magnitude of this effect being higher in developed countries than in developing countries. Furthermore, the real exchange rate depreciation effect of the tax reform is higher in countries with greater trade openness and a tax structure that is less dependent on international trade tax revenue.

목차

I. Introduction

II. Theoretical Discussion on the Effect of Tax Reform on the Real Exchange Rate

III. Model Specification

IV. Econometric Strategy

V. Empirical Results

VI. Conclusion

References

키워드

tax transition reform real exchange rate trade openness developing countries