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Mr. Paolo Dudine and João Tovar Jalles
In this paper we provide short- and long-run tax buoyancy estimates for 107 countries (distributed between advanced, emerging and low-income) for the period 1980–2014. By means of Fully-Modified OLS and (Pooled) Mean Group estimators, we find that: i) for advanced economies both long-run and short-run buoyancies are not different from one; ii) long run tax buoyancy exceeds one in the case of CIT for advanced economies, PIT and SSC in emerging markets, and TGS for low income countries, iii) in advanced countries (emerging market economies) CIT (CIT and TGS) buoyancy is larger during contractions than during times of economic expansions; iv) both trade openness and human capital increase buoyancy while inflation and output volatility decrease it.
International Monetary Fund. African Dept.

buoyancy can differ between the short and long run . If tax revenue increases by more than GDP in percentage terms (meaning a buoyancy coefficient higher than one), then the tax system is considered to be a good automatic stabilizer. However, long run buoyancy is generally expected to be equal to one. If not, at least on theoretical grounds, there would come a point where revenues exceed 100 percent of their respective base. Long-run buoyancy is of relevance to assess the effect of economic growth on long-term fiscal sustainability. A coefficient larger than one would

Vincent Belinga, Ms. Dora Benedek, Ruud A. de Mooij, and Mr. John Norregaard

-run buoyancy coefficient. As local governments generally aim to stabilize revenue from property taxes by adjusting rates counter-cyclically ( Norregaard, 2013 ), property taxes may feature particularly small short-run buoyancy. In countries with rigid wages and tight employment protection, revenue from PIT and SSC are relatively stable and, therefore, the short-run buoyancy coefficient might be below one. As regards the GST, people may smooth consumption in response to fluctuations in the business cycle, so that short-run buoyancy can be smaller than one. Short-term buoyancy

Vincent Belinga, Ms. Dora Benedek, Ruud A. de Mooij, and Mr. John Norregaard
By how much will faster economic growth boost government revenue? This paper estimates short- and long-run tax buoyancy in OECD countries between 1965 and 2012. We find that, for aggregate tax revenues, short-run tax buoyancy does not significantly differ from one in the majority of countries; yet, it has increased since the late 1980s so that tax systems have generally become better automatic stabilizers. Long-run buoyancy exceeds one in about half of the OECD countries, implying that GDP growth has helped improve structural fiscal deficit ratios. Corporate taxes are by far the most buoyant, while excises and property taxes are the least buoyant. For personal income taxes and social contributions, short- and long-run buoyancies have declined since the late 1980s and have, on average, become lower than one.
Mr. Paolo Dudine and João Tovar Jalles

the same across countries. 6 The group-specific short-run coefficients and the common long-run coefficients are computed by maximum likelihood estimation. Both the MG and PMG are appropriate for the analysis of dynamic panels with both large time and cross-section dimensions, and they have the advantage of accommodating both the long-run equilibrium and the possibly heterogeneous dynamic adjustment process. In particular, these estimators allow correcting for the potential bias that could result from estimating tax buoyancy coefficients using standard fixed

International Monetary Fund. African Dept.
This Selected Issues paper offers policy recommendations for Senegal to reach high and sustained growth with the goal of exiting low-income country status. For Senegal to reach Plan Sénégal Emergent (PSE) objectives, reforms under the PSE need to create space for small and medium-sized enterprises and foreign direct investment to thrive. Reform of Senegal’s business environment needs to be accelerated. Macrostructural reforms should be stepped up in the energy sector, in which Senegal still ranks 170th in the world. Progress in the electricity sector can be achieved by continuing to improve reliability of supply and reduce electricity costs. Reform of the taxation system, by simplifying procedures and optimizing the tax rates, is another macro-critical area in which Senegal needs to make significant strides.
Mr. Charles Y. Mansfield

× Y T t and for any given tax by Δ T k Δ Y × Y T k . As in the case of elasticity, the buoyancy coefficient has been estimated from a double log function implying the original form: T = αY β The difference between tax-to-income elasticity and tax buoyancy shows the importance of discretionary changes, while a tax-by-tax comparison of the two measures points to the taxes for which discretionary changes were most important. As shown in Table 5 , the tax system as a whole had a buoyancy of 1.69, compared with an elasticity of 1.14. This large difference

International Monetary Fund

last 20 years. However, this masks the significant progress that has been made in boosting non-trade taxes which now yield revenue of 10.2 percent of GDP compared to 7.4 percent of GDP only ten years ago, implying an annual buoyancy coefficient of 1.27. 20 Much of the additional revenue has been mobilized in a structural sound way, especially through sales tax reform. Revenue enhancement under the income tax, however, have relied excessively on a mushrooming net of withholding taxes, with more fundamental improvements left for the period ahead. 46. The cross

International Monetary Fund

and revenue effects are calculated in a similar fashion: We use four price indexes (fuel export price, fuel import price, non-fuel export price, non-fuel import price). For each price index we calculate the buoyancy as B X,i,t =(X t -X t-1 )/p i,t , where X t is the revenue to GDP (or expenditure to GDP) ratio in year t and p i,t , is the growth rate of the price index i in year t . Given the significant decline in global commodity prices from 2008 to 2009, which is similar to the terms of trade shock here, the buoyancy coefficients are calculated using

Ms. Stefania Fabrizio

price). For each price index we calculate the buoyancy as B X,i,t = ( X t − X t−1 )/ p i,t , where X t is the revenue/GDP (or expenditure/GDP) ratio in year t and p i,t is the growth rate of the price index i in year t . Given the significant decline in global commodity prices from 2008 to 2009, which is similar to the terms-of-trade shock here, the buoyancy coefficients are calculated using 2009 data. However, if a country has estimated buoyancy greater than four or less than the 25th percentile value for a given price index, we use 2008 data instead