# **Table 3 – Robustness Check Alternative Determinants of Tax Revenues**

Panel A: Size of shadow economy (in % of GDP) used instead of agriculture value added

|**Dependent Variable: Tax**|**Revenue in**|**% of GD**|**P**|||||||
|---|---|---|---|---|---|---|---|---|---|
||(1)|(2)|(3)|(4)|(5)|(6)|(7)|(8)|(9)|
|||**1994-200**|**9**||**1994-200**|**1**||**2002-20**|**09**|
|Constant|27.452<br>(18.692)**|14.226<br>(7.958)**|7.916<br>*(4.359)***|24.83<br>(8.708)***|9.943<br>(2.844)**|1.974<br>*(0.59)|28.211<br>(16.484)*|13.471<br>*(6.308)**|10.229<br>*(4.719)***|
|GDP per capita (constant )|0.669<br>(2.049)**|0.485<br> (1.377)|-0.267<br>(-0.796)|1.76<br>(2.61)***|1.57<br> (2.31)**|0.175<br>(0.263)|0.395<br>(1.056)|-0.219<br>(-0.525)|-0.325<br>(-0.839)|
|Population Growth|-1.35<br>(-4.947)**|-0.759<br>(-2.806)*|-0.611<br>* (-2.363)**|-1.011<br>(-1.801)*|0.503<br> (0.878)|0.513<br>(0.969)|-1.499<br>(-4.798)**|-1.156<br>(-3.811)*|-0.971<br>* (-3.261)***|
|Trade openness|0.011|-0.006|-0.003|0.02|-0.005|-0.005|0.009|-0.006|-0.003|
|(% of GDP)|(2.343)**|(-1.394)|(-0.768)|(1.958)*|(-0.491)|(-0.528)|(1.697)*|(-1.331)|(-0.733)|
|Size of shadow economy|-0.2|-0.062|0.022|-0.195|-0.048|0.045|-0.196|-0.054|0.013|
|(% of GDP)|(-6.927)**|(-2.153)*|* (0.761)|(-3.632)**|(-0.902)|(0.864)|(-5.71)***|(-1.586)|(0.381)|
|CORRUPTION INDEX||-0.982<br>(-5.498)*|**||-0.782<br>(-2.495)*|*||-1.414<br>(-6.049)*|**|
|BUREAUCRACY INDEX|||-1.783<br>(-10.223)***|||-2.037<br>(-6.282)***|||-1.643<br>(-7.898)***|
|OBS|840|74|2<br>742|244|215|215|596|52|7<br>527|
|Adjusted R2|0.515|0.60|4<br>0.639|0.550|0.642|0.691|0.508|0.60|6<br>0.624|

Panel B: Share total consumption in GDP is added

|**Dependent Variable: Tax R**|**evenue in**|**% of GDP**||||||||
|---|---|---|---|---|---|---|---|---|---|
||(1)|(2)|(3)|(4)|(5)|(6)|(7)|(8)|(9)|
|||**1994-20**|**09**||**1994-200**|**1**||**2002-20**|**09**|
|Constant|6.159<br>(3.813)**|6.13<br>*(3.143)*|3.41<br>**(1.724)*|-2.026<br>(-0.797)|1.872<br>(0.576)|-3.598<br>(-1.082)|10.957<br>(5.271)**|7.299<br>*(2.984)*|7.953<br>**(3.2)***|
|GDP per capita (constant )|1.67<br>(7.878)**|0.663<br>*(2.782)*|0.176<br>**(0.705)|2.11<br>(5.669)**|1<br>*(2.523)**|0.087<br> (0.205)|1.35<br>(5.127)**|-0.024<br>*(-0.072)|0.306<br>(0.954)|
|Population Growth|-0.616<br>(-3.123)*|-0.622<br>* (-2.845)|-0.801<br>** (-3.688)***|-0.147<br>(-0.555)|0.405<br>(1.308)|0.049<br>(0.158)|-0.622<br>(-1.956)*|-1.027<br> (-3.102)|-1.254<br>** (-3.7)***|
|Trade openness<br>(% of GDP)|0.042<br>(9.765)**|0.03<br>*(6.488)*|0.031<br>**(6.776)***|0.039<br>(5.841)**|0.021<br>*(2.8)***|0.026<br>(3.509)***|0.044<br>(7.82)***|0.033<br> (5.726)*|0.031<br>**(5.376)***|
|Agriculture value added<br>(% of GDP)|-0.312<br>(-15.311)|-0.192<br>* (-8.49)*|-0.105<br>** (-4.206)***|-0.321<br>(-12.102)|-0.211<br>* (-7.034)*|-0.14<br>* (-4.339)***|-0.348<br>(-9.861)**|-0.162<br>(-4.211)|-0.058<br>** (-1.306)|
|Total consumtion|0.191|0.101|0.095|0.272|0.139|0.154|0.146|0.064|0.052|
|(in % of GDP)|(11.969)*|*(5.103)*|**(4.9)***|(10.534)*|*(4.017)**|*(4.607)***|(7.283)**|*(2.695)*|**(2.181)**|
|CORRUPTION INDEX||-0.818<br>(-6.769)|***||-0.606<br>(-3.281)*|**||-1.369<br>(-7.043)|***|
|BUREAUCRACY INDEX|||-1.247<br>(-8.959)***|||-1.306<br>(-6.174)***|||-1.204<br>(-6.075)***|
|OBS|131|8<br>112|5<br>1125|58|9<br>48|3<br>483|729|64|2<br>642|
|Adjusted R2|0.62|1<br>0.6|56<br>0.666|0.65|2<br>0.69|5<br>0.712|0.608|0.64|7<br>0.640|

Note: The estimation technique is panel OLS with regional and time dummies. t-statistics are reported in parenthesis. The estimated coefficients of GDP per capita are multiplied by 10,000. As in Table 1, the dependent variable in each panel is the share of tax revenue in percentage of GDP. See Table A2 for the definitions of the variables. We also include both regional and time dummies. The regions are defined in Table A4. The time dummies are annual.

16