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Flatliners: Ideology and Rational Learning in the Diffusion of the Flat Tax


  • Alexander Baturo
  • Julia Grey


What factors explain the wave of adoption of the flat tax in Eastern Europe — a policy that was all but unmentionable in the rest of the world? We argue that, once the first few successes were underway, governments with liberal outlooks toward taxation adopted the reform through a process of rational learning: an often-radically new government will tend to adopt the policy based on successful implementation of its neighbors. Our contribution to the literature on the political economy of taxation is threefold. First, we show that, both theoretically and empirically, the existing work on taxation does not apply to the flat tax revolution in the post-communist countries. Second, we take into consideration the need and the difficulty of measuring ideology of Eastern European political parties. Third, we approach the issue of policy diffusion by explicitly modeling the different mechanisms that might underlie the process. We also find that the presence of other market-minded reforms do not predict adoption of the flat tax.

Suggested Citation

  • Alexander Baturo & Julia Grey, 2007. "Flatliners: Ideology and Rational Learning in the Diffusion of the Flat Tax," The Institute for International Integration Studies Discussion Paper Series iiisdp210, IIIS.
  • Handle: RePEc:iis:dispap:iiisdp210
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    References listed on IDEAS

    1. Peter Kurrild-Klitgaard, 2000. "The Constitutional Economics of Autocratic Succession," Public Choice, Springer, vol. 103(1), pages 63-84, April.
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    3. Gleditsch, Kristian Skrede & Ward, Michael D., 2006. "Diffusion and the International Context of Democratization," International Organization, Cambridge University Press, vol. 60(04), pages 911-933, October.
    4. Egorov, Georgy & Sonin, Konstantin, 2005. "The Killing Game: Reputation and Knowledge in Non-Democratic Succession," CEPR Discussion Papers 5092, C.E.P.R. Discussion Papers.
    5. Tomz, Michael & Wittenberg, Jason & King, Gary, 2003. "Clarify: Software for Interpreting and Presenting Statistical Results," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 8(i01).
    6. Acemoglu,Daron & Robinson,James A., 2009. "Economic Origins of Dictatorship and Democracy," Cambridge Books, Cambridge University Press, number 9780521671422, March.
    7. David Epstein & Robert H. Bates & Jack Goldstone & Ida Kristensen & Sharyn O'Halloran, 2004. "Democratic Transitions," CID Working Papers 101, Center for International Development at Harvard University.
    8. Jennifer Gandhi & Adam Przeworski, 2006. "Cooperation, Cooptation, And Rebellion Under Dictatorships," Economics and Politics, Wiley Blackwell, vol. 18(1), pages 1-26, March.
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    10. repec:cup:apsrev:v:88:y:1994:i:04:p:903-910_09 is not listed on IDEAS
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    Cited by:

    1. Michael Keen & Yitae Kim & Ricardo Varsano, 2008. "The “flat tax(es)”: principles and experience," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(6), pages 712-751, December.

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