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Empirical evidence on the relationship between trade liberalization, exchange rates, and tax revenue is mixed. This paper examines these linkages anew. Using a panel of 22 countries in Sub-Saharan Africa, over 1980-1996, we perform Generalized Method of Moment regressions to test this relationship. We find evidence that the relationship between trade liberalization and tax revenue is sensitive to the measure used to proxy trade liberalization, but that, in general, trade liberalization is not strongly linked to aggregate tax revenue or its components-though with one measure, it is linked to higher income tax revenue. Currency appreciation and higher inflation show some linkage to lower tax revenues or its components. These results show some partial consistency with previous findings, and support the notion that trade liberalization accompanied by appropriate macroeconomic policies can be undertaken in a way that preserves overall revenue yield.

Foreign exchange rates --- Taxation --- Duties --- Fee system (Taxation) --- Tax policy --- Tax reform --- Taxation, Incidence of --- Taxes --- Finance, Public --- Revenue --- Exchange rates --- Fixed exchange rates --- Flexible exchange rates --- Floating exchange rates --- Fluctuating exchange rates --- Foreign exchange --- Rates of exchange --- Rates --- Africa, Sub-Saharan --- Africa, Black --- Africa, Subsaharan --- Africa, Tropical --- Africa South of the Sahara --- Black Africa --- Sub-Sahara Africa --- Sub-Saharan Africa --- Subsahara Africa --- Subsaharan Africa --- Tropical Africa --- Commercial policy. --- Exports and Imports --- Public Finance --- International Economics --- International Fiscal Issues --- International Public Goods --- Development Planning and Policy: Trade Policy --- Factor Movement --- Foreign Exchange Policy --- Trade Policy --- International Trade Organizations --- Taxation, Subsidies, and Revenue: General --- Business Taxes and Subsidies --- Public finance & taxation --- International trade & commerce --- International economics --- Revenue administration --- Trade facilitation --- Trade liberalization --- Taxes on trade --- Consumption taxes --- Customs administration --- Commercial policy --- Spendings tax