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Taxation and democracy: an instrumental variable approach

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  • Nurullah Gur

Abstract

Our article investigates the effect of taxation on democracy. We exploit exogenous variation in taxation driven by wars from the pre-modern era and document a positive and highly significant first-stage relationship between pre-modern war casualties and taxation. Using this instrumental variable strategy, we find that taxation has a positive effect on democracy.

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  • Nurullah Gur, 2014. "Taxation and democracy: an instrumental variable approach," Applied Economics Letters, Taylor & Francis Journals, vol. 21(11), pages 763-766, July.
    • Handle: RePEc:taf:apeclt:v:21:y:2014:i:11:p:763-766
    DOI: 10.1080/13504851.2014.889793
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    1. North, Douglass C. & Weingast, Barry R., 1989. "Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England," The Journal of Economic History, Cambridge University Press, vol. 49(4), pages 803-832, December.
    2. Ross, Michael L., 2004. "Does Taxation Lead to Representation?," British Journal of Political Science, Cambridge University Press, vol. 34(2), pages 229-249, April.
    3. Mark Dincecco & Mauricio Prado, 2012. "Warfare, fiscal capacity, and performance," Journal of Economic Growth, Springer, vol. 17(3), pages 171-203, September.
    4. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    5. Baskaran, Thushyanthan & Bigsten, Arne, 2013. "Fiscal Capacity and the Quality of Government in Sub-Saharan Africa," World Development, Elsevier, vol. 45(C), pages 92-107.
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    Cited by:

    1. Yucel Demirkclic & Fazli Yildiz & Ersin Nail Sagdic, 2023. "An Analysis of the Relationship Between Taxation and Democracy: The Example of European Union Member and Candidate Countries (2010-2020)," Journal of Economic Policy Researches, Istanbul University, Faculty of Economics, vol. 10(2), pages 457-483, July.

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