Sins of the elder: Fiscal illusion in democracies
AbstractThis work discusses the implications of democratic maturity on levels of Fiscal Illusion. Its main contribution is to identify the relevance of good-governance institutions that prevent incumbents in established democracies from degenerating into electoral rent-seekers. This work develops a model that converges with a Gordon (1989) type theorem. This theorem predicts that some countries ruled by incumbents are more likely to revert to FI practices as the electorate’s maturity increases and if there are no strong restrictions on the social acceptance of political rents. Our empirical results show that democratic maturity tends to diminish fiscal illusion.
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Bibliographic InfoArticle provided by IEF in its journal Hacienda Pública Española/Revista de Economía Pública.
Volume (Year): 196 (2011)
Issue (Month): 1 (january)
Democratic maturity; Fiscal Illusion; rent-seeking.;
Find related papers by JEL classification:
- H6 - Public Economics - - National Budget, Deficit, and Debt
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
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