IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/9760.html
   My bibliography  Save this paper

Towards a Fiscal Illusion Index

Author

Listed:
  • Mourão, Paulo

Abstract

This paper presents an index of Fiscal Illusion for 68 democratic countries from 1960 to 2006. The studied Fiscal Illusion is the one related to a wrong perception of the budget aggregates according to the voters and taxpayers’ perspectives. In the construction of the index, methodological issues were carefully taken into account. The results obtained reveal that fiscal illusion varies greatly around the world. Countries such as Mali, Pakistan, Russia and Sri Lanka have the highest average values over the time period considered; while Austria, Luxembourg, Netherlands and New Zealand have the lowest. Regarding the time dimension, between 1980 and 1995 there was a significant decrease in the average value of the index across countries, suggesting a reduction in the adoption of fiscal illusion measures during this period. After 1995, the index remained stable in most of the countries.

Suggested Citation

  • Mourão, Paulo, 2007. "Towards a Fiscal Illusion Index," MPRA Paper 9760, University Library of Munich, Germany, revised 28 Jul 2008.
  • Handle: RePEc:pra:mprapa:9760
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/9760/1/MPRA_paper_9760.pdf
    File Function: original version
    Download Restriction: no

    References listed on IDEAS

    as
    1. Brender, Adi & Drazen, Allan, 2005. "Political budget cycles in new versus established democracies," Journal of Monetary Economics, Elsevier, vol. 52(7), pages 1271-1295, October.
    2. Giuseppe Nicoletti & Stefano Scarpetta & Olivier Boylaud, 2000. "Summary Indicators of Product Market Regulation with an Extension to Employment Protection Legislation," OECD Economics Department Working Papers 226, OECD Publishing.
    3. Kerstin Bernoth & Guntram B. Wolff, 2008. "Fool The Markets? Creative Accounting, Fiscal Transparency And Sovereign Risk Premia," Scottish Journal of Political Economy, Scottish Economic Society, vol. 55(4), pages 465-487, September.
    4. Alesina, Alberto & Hausmann, Ricardo & Hommes, Rudolf & Stein, Ernesto, 1999. "Budget institutions and fiscal performance in Latin America," Journal of Development Economics, Elsevier, vol. 59(2), pages 253-273, August.
    5. Sanandaji, Tino & Wallace, Björn, 2010. "Fiscal Illusion and Fiscal Obfuscation:An Empirical Study of Tax Perception in Sweden," Working Paper Series 837, Research Institute of Industrial Economics.
    6. Eugeni Garcia Alegre & Guillem López, 2004. "The effects of poor financial information systems on the long term sustainability of local public services. Empirical evidence from the Catalan Municipalities," Working Papers, Research Center on Health and Economics 746, Department of Economics and Business, Universitat Pompeu Fabra.
    7. Frank Jensen & Niels Vestergaard, 1999. "Regulation of Renewable Resources in Federal Systems: The Case of Fishery in th EU," Working Papers 3/99, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.
    8. Alt, James E. & Lassen, David Dreyer, 2006. "Fiscal transparency, political parties, and debt in OECD countries," European Economic Review, Elsevier, vol. 50(6), pages 1403-1439, August.
    9. Ismael Sanz & Francisco J. Velázquez, 2003. "Fiscal illusion, fiscal consolidation and government expenditure composition in the OECD: a dynamic panel data approach," European Economy Group Working Papers 21, European Economy Group.
    10. Michael Freudenberg, 2003. "Composite Indicators of Country Performance: A Critical Assessment," OECD Science, Technology and Industry Working Papers 2003/16, OECD Publishing.
    11. International Monetary Fund, 2005. "Fiscal Transparency and Economic Outcomes," IMF Working Papers 05/225, International Monetary Fund.
    12. Eusepi, Giuseppe, 2006. "Public finance and welfare: From the ignorance of the veil to the veil of ignorance," Journal of Economic Behavior & Organization, Elsevier, vol. 59(4), pages 460-477, April.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Fiscal Illusion; Indexes/Indicators; Democracy;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:9760. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter) or (Rebekah McClure). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.