With respect to this literature, our paper is mostly linked with the contributions in the strands of literature described in ( _ii_ ) and ( _iii_ ), as follows. First, our main focus is on the consequences of IFFs in terms of tax revenues; in particular, this will require mobilizing information from the studies presented in (i), since our impact assessment analysis contrasts Non-Cooperative countries (i.e. that do not cope with international standards on combating IFFs) with Cooperative countries that present comparable characteristics including in terms of IFFs determinants.<sup>**§§**</sup> Second, a sensitivity analysis explores the possible heterogeneity of the effect of IFFs on tax revenues in various environments; as such, we are interested in policies that may help mitigate the potentially-detrimental effect of IFFs on tax revenues.

# **III. Data**

Based on IFFs data availability our study covers 58 developing and emerging countries during the period 2004-2013. Data on tax revenues comes from the International Centre for Tax and Development’s (ICTD) Government Revenue Dataset (GRD) and the IMF’s tax revenue dataset, and data on the treatment variable comes from the Financial Action Task Force (FATF). The remaining variables come from various sources including the World Bank Group (World Development Indicators and Worldwide Governance Indicators), the IMF World Economic Outlook (WEO), the Global Financial Integrity (GFI), ICRG, Kose et al. (2017) database, and Chinn & Ito (2006) index of capital openness. Our sample consists of 17 Non-Cooperative and 41 Cooperative countries (see Table A1 in the Online Appendix).

Simple descriptive statistics that compare countries before and after their inclusion in the FATF list reveal the following.<sup>*******</sup> First, Figure 1a shows that the inclusion of countries in the FATF (i.e. Non-Cooperative countries) signals a change of the IFFs trend: on average, IFFs steeply increase—from 0.41% to 2.38%—compared with the counterfactual decrease for the countries that are not on the list (i.e. the Cooperative countries). Second, as shown by Figure 1b, including countries in the FATF list equally signals a change in the trend of tax revenues: on average, these resources are preserved in Cooperative countries (around 16%), while they dramatically fall (from 18.23% to 13.94%) in Non-Cooperative countries. Although these

> **§§** As such, our analysis equally contributes to the substantial literature on the determinants of tax revenues (see e.g. the classical contributions of Lotz and Morss, 1967; Tait et al., 1979; or Tanzi, 1992, and the more recent work of Gupta, 2007; or Bird et al., 2008). According to this literature, the main determinants of tax revenues include income, international trade, agriculture share, natural resources, foreign debt, and particularly the quality of institutions.

> ******* The cut-off dates for non-cooperative countries are the years of their inclusion in the FATF list. The cut-off date for cooperative countries is the mid-year period between the first year when a country is included on the FATF list (2004 in our sample) and the sample end year (2013), as in Miskin & Schmidt-Hebbel (2007).

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