Weak states and steady states: the dynamics of fiscal capacity

Besley, Timothy ORCID: 0000-0002-8923-6372, Ilzetzki, Ethan ORCID: 0000-0002-7573-9411 and Persson, Torsten (2010) Weak states and steady states: the dynamics of fiscal capacity. In: The Political Economy of Economic Development, 2010-04-30 - 2010-05-01, Manresa, Spain, ESP. (Submitted)

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Abstract

Investments in fiscal capacity — economic institutions for tax compliance — are an important feature of economic development. This paper develops a dynamic model to study such investments and their evolution over time. We contrast a social planner’s investment path with paths where political constraints are important. Three types of states emerge in the long run: (1) a common-interest state where public resources are devoted to public goods, (2) a redistributive state where additional fiscal capacity is used for transfers, and (3) a weak state with no transfers and a low level of public goods provision. The paper characterizes the conditions under which each possibility emerges and comparative statics wihin each regime.

Item Type:	Conference or Workshop Item (Paper)
Official URL:	http://www.crei.cat/
Additional Information:	© 2010 The Authors
Divisions:	Economics
Subjects:	H Social Sciences > HC Economic History and Conditions
Date Deposited:	04 Apr 2011 13:27
Last Modified:	12 Dec 2024 04:49
URI:	http://eprints.lse.ac.uk/id/eprint/33781

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