02144cas a2200277 a 4500 AALejournalIMF015823 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513509860 1018-5941 BD-DhAAL BD-DhAAL Akanbi, Olusegun Ayodele. State Institutions and Tax Capacity : An Empirical Investigation of Causality / Olusegun Ayodele Akanbi. Washington, D.C. : International Monetary Fund, 2019. 1 online resource (38 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Would better state institutions increase tax collection, or would higher tax collection help improve state institutions? In the absence of conclusive guidance from theory, this paper searches for an empirical answer to this question, using a panel dataset covering 110 non-resource-rich countries from 1996 to 2017. Employing a panel vector error correction model, the paper finds that tax capacity and state institutions cause and reinforce each other for a wide range of country groups. The bi-directional causality results suggest that developing tax capacity and building state institutions need to go hand in hand for best results, particularly in developing countries. Based on the impulse response analyses, the paper also finds that the causal effects in advanced economies are generally low in both directions, while in developing countries, both tax capacity and institutions shocks have larger positive impacts on institutions and tax capacity, respectively. Mode of access: Internet Confidence Interval imf Tax Capacity imf WP imf IMF Working Papers; Working Paper ; No. 2019/177 Full text available on IMF http://elibrary.imf.org/view/journals/001/2019/177/001.2019.issue-177-en.xml IMF e-Library