The effect of monetary unification on public debt and its real return

We explore the implications of monetary unification for real interest rates and (relative) public debt levels. The adoption of a common monetary policy renders the risk-return characteristics of the participating countries’ public debt more similar. The implied reduction in the scope for risk diversification raises the average expected real return on the debt. Also, the share of the union-wide debt issued by relatively myopic governments or of countries that initially have a relatively dependent central bank increases after unification. This may put the political sustainability of the union under pressure. A transfer scheme that penalizes debt increases beyond the union average is able to undo the interest rate effect of unification, but magnifies the spread in relative debt levels.     

Semi-Autonomous Revenue Authorities in Sub-Saharan Africa: Silver Bullet or White Elephant

A major component of tax administration reform in sub-Saharan Africa for the last 30 years has been the creation of semi-autonomous revenue authorities (SARAs). The effects of their creation on revenue performance have been much debated, although there are only a few quantitative studies. The core argument of this paper is that existing research suggesting diverse and contradictory outcomes has not taken account of trends in revenue performance in the years before the establishment of SARAs. Allowing for this revenue history our analysis, based on 46 countries over the period 1980–2015, provides no robust evidence that SARAs induce an increase in revenue performance. This does not imply that SARAs may not provide benefits for tax collection, but they do not demonstrably increase (or decrease) revenue collected.