Remittances and Taxation in times of crisis: Does political instability condition the effect of remittances on domestic tax revenues?

This paper tests whether political stability moderates the effect of migrant remittances on domestic tax revenues in Africa. It estimates the effect of migrant remittances on domestic direct and indirect taxes, allowing it to be conditional on political stability in a panel of 40 African countries from 2000 to 2019. Using an instrumental variable strategy, we observe that remittances increase both direct and indirect tax revenues in countries where institutions are more stable but not in countries that are unstable. JEL : F22, H2, E62, O55.