Visibility of Burdens and Benefits of Public Revenue and Expenditure in OECD Countries with Two and Three Levels of Territorial Government
The size and pattern of any public budget depend, among other factors, on the visibility of both the burdens and benefits of public revenue and expenditure. Furthermore, such visibility is a necessary - not a sufficient - condition for an efficient allocation of resources between the private and public sectors of an economy. Although the importance of this visibility has been well known by academicians and practitioners for a long time, attempts to quantify it by taking the internal structure of every type of revenue and expenditure and its relative financial weight in a fiscal system into consideration are recent, and indicators used till now rest on several structural parameters, each of them ranging from to 1, which are combined in a multiplicative way. For this reason a estimate has always resulted as anyone of such factors was also 0. Starting from the same parameters, factors, and initial values, an alternative and more fruitful way to measure visibility of burdens and benefits of a public budget can consist of combining them in an additive instead of a multiplicative way. Then a null parametric value does not result in a estimate, and calculations can show higher final values which could be much more sensitive to the initial values of other parameters and factors. After six years of research in the scientific speciality of Fiscal Federalism, the aim of this contribution is to present, for the first time, new additive indicators applied to local, intermediate, and central territorial government levels in Austria, Canada, Germany, Spain, Switzerland, and USA, and to compare them with estimates for the local and central territorial government levels in the remaining OECD countries (Australia, Belgium, Canada, Czech Republic, Denmark, Finland, France, Greece, Hungary, Ireland, Island, Italy, Japan, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Portugal, Sweden, Turkey, United Kingdom), by using data and essential information provided by the International Monetary Fund. The concurrence of several factors (such as non-coerciveness, non-existence of specific requitals, lack of information on concepts and quantities, partial shifting of burden by tax-payers, intergovernmental grants, etc.) explain why burden visibility values are still lower than 100.00. On the other hand, burden visibility values for the consolidated central government are higher than those estimated for the intermediate and local levels of same countries, mainly owing to significant grants received by the subcentral public administrations from central public administrations. Policy implications of these new estimates are straightforward for OECD countries: as both present revenue and benefit visibility are not near to 100.00 en general, allocation improvements could be obtained by implementing changes and reforms to raise values in general and by approaching these two types of budget visibility to such an optimal value. Other general and significant conclusions are offered for re-organization of territorial levels of governmnent in every country, devolution of powers, accountability, and optimization of sizes and patterns of public budgets.
|Date of creation:||Aug 2003|
|Date of revision:|
|Contact details of provider:|| Postal: Welthandelsplatz 1, 1020 Vienna, Austria|
Web page: http://www.ersa.org
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Weingast, Barry R & Shepsle, Kenneth A & Johnsen, Christopher, 1981. "The Political Economy of Benefits and Costs: A Neoclassical Approach to Distributive Politics," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 642-64, August.
- Pommerehne, Werner W & Schneider, Friedrich, 1978. "Fiscal Illusion, Political Institutions, and Local Public Spending," Kyklos, Wiley Blackwell, vol. 31(3), pages 381-408.
- Hamilton, Bruce W., 1983. "The flypaper effect and other anomalies," Journal of Public Economics, Elsevier, vol. 22(3), pages 347-361, December.
- Becker, Gary S., 1985.
"Public policies, pressure groups, and dead weight costs,"
Journal of Public Economics,
Elsevier, vol. 28(3), pages 329-347, December.
- Gary S. Becker, 1984. "Public Policies, Pressure Groups, and Dead Weight Costs," University of Chicago - George G. Stigler Center for Study of Economy and State 35, Chicago - Center for Study of Economy and State.
When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa03p162. 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: (Gunther Maier)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 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.