Besley, Timothy 
ORCID: 0000-0002-8923-6372, Ilzetzki, Ethan ORCID: 0000-0002-7573-9411 and Persson, Torsten
(2013)
Weak states and steady states: the dynamics of fiscal capacity.
American Economic Journal: Macroeconomics, 5 (4).
205 - 235.
ISSN 1945-7707
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 the evolution of fiscal capacity over time. We contrast a social planner's investment path with politically feasible paths. Three types of states emerge in the long run: a common-interest state where public resources are devoted to public goods, a redistributive state where additional fiscal capacity is used for transfers, and a weak state with no transfers and a low level of public goods provision. We also present some preliminary evidence consistent with the theory.
| Item Type: | Article |
|---|---|
| Official URL: | https://www.aeaweb.org/journals/mac |
| Additional Information: | © 2013 American Economic Association |
| Divisions: | Economics |
| Subjects: | H Social Sciences > HC Economic History and Conditions H Social Sciences > HJ Public Finance |
| JEL classification: | E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E23 - Production E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy Formation, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E60 - General H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H23 - Externalities; Redistributive Effects; Environmental Taxes and Subsidies H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H26 - Tax Evasion H - Public Economics > H4 - Publicly Provided Goods > H41 - Public Goods |
| Date Deposited: | 22 Feb 2013 15:22 |
| Last Modified: | 15 Feb 2025 23:15 |
| URI: | http://eprints.lse.ac.uk/id/eprint/46813 |
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