Skip to main content
Article thumbnail
Location of Repository

Weak states and steady states: the dynamics of fiscal capacity

By Timothy Besley, Ethan Ilzetzki and Torsten Persson

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

Topics: HC Economic History and Conditions
Publisher: Centre de Recerca en Economia Internacional
Year: 2010
OAI identifier: oai:eprints.lse.ac.uk:33781
Provided by: LSE Research Online
Download PDF:
Sorry, we are unable to provide the full text but you may find it at the following location(s):
  • http://www.crei.cat/ (external link)
  • http://eprints.lse.ac.uk/33781... (external link)
  • Suggested articles


    To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.