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Estabilidad política y tributación
[Taxation and political stability]

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  • Fernando, Estrada
  • Mihai, Mutascu
  • Aviral Kumar, Tiwari

Abstract

The present study is, in particular, an attempt to test the relationship between tax level and political stability by using some economic control variables and to see the relationship among government effectiveness, corruption, and GDP. For the purpose, we used the Vector Autoregression (VAR) approach in the panel framework, using a country-level panel data from 59 countries for the period 2002 to 2008. The salient features of this model are: (a) simplicity is based on a limited number of variables(five) are categorical or continuous and not dependent on complex interactions or nonlinear effects. (b) accuracy: a low level of errors, the model achieves a high percentage of accuracy in distinguishing countries with inclination to political instability, compared to countries with political stability, (c) generality: the model allows to distinguish types of political instability, both resulting from acts of violence and failure of democracies to show, and (d) novelty: the model incorporates a tool that helps evaluate and exclude many variables used by the conventional literature. This approach is mainly based on the recognition of state structures and the relations between elites and parties.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 45226.

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Date of creation: 2013
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Handle: RePEc:pra:mprapa:45226

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Keywords: Taxation; Political Stability; Connection; Effects; Panel VAR analysis;

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  1. Christian B. Mulder & Matthieu Bussière, 1999. "Political Instability and Economic Vulnerability," IMF Working Papers 99/46, International Monetary Fund.
  2. Volkerink, Bjørn & Haan, Jakob de, 1999. "Political and institutional determinants of the tax mix : an empirical investigation for OECD countries," Research Report 99E05, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
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  12. Love, Inessa & Zicchino, Lea, 2006. "Financial development and dynamic investment behavior: Evidence from panel VAR," The Quarterly Review of Economics and Finance, Elsevier, vol. 46(2), pages 190-210, May.
  13. Bell, Stephanie, 2001. "The Role of the State and the Hierarchy of Money," Cambridge Journal of Economics, Oxford University Press, vol. 25(2), pages 149-63, March.
  14. Alex Cukierman & Sebastian Edwards & Guido Tabellini, 1989. "Seigniorage and Political Instability," NBER Working Papers 3199, National Bureau of Economic Research, Inc.
  15. Paul Collier, 2009. "The political economy of state failure," Oxford Review of Economic Policy, Oxford University Press, vol. 25(2), pages 219-240, Summer.
  16. Bohn, Frank, 2003. "Public Finance under Political Instability and Debt Conditionality," Royal Economic Society Annual Conference 2003 25, Royal Economic Society.
  17. M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
  18. Ceyhun Elgin, 2010. "Political Turnover, Taxes and the Shadow Economy," Working Papers 2010/08, Bogazici University, Department of Economics.
  19. Fabrizio Carmignani, 2003. "Political Instability, Uncertainty and Economics," Journal of Economic Surveys, Wiley Blackwell, vol. 17(1), pages 1-54, February.
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