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Fiscal Churning and Political Efficiency

  • Filip Palda

    (Ecole nationale d'administration publique in Montreal)

This paper proposes churned transfers as a measure of political inefficiency. A transfer is churned when at least the same level of voter satisfaction could have been achieved by lowering the voter's tax burden by the amount of the transfer. Previous measures of political efficiency---Pommerehne and Schneider (1983)---depend on the researcher’s assumptions about voter preferences. Churned transfers avoid this problem, but depend on the researcher’s assumptions about government tax and spending incidence. This paper suggests fiscal churning as a supplement to measures of political efficiency that rely on assumptions about the preferences of the median voter. Churning measures promise to throw light on the Chicago-Virginia controversy over the efficiency of political systems.

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Paper provided by EconWPA in its series Public Economics with number 0111008.

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Length: 19 pages
Date of creation: 10 Nov 2001
Date of revision:
Handle: RePEc:wpa:wuwppe:0111008
Note: Type of Document - PDF; prepared on IBM PC ; to print on HP/PostScript; pages: 19; figures: included. PDF file can be viewed or printed
Contact details of provider: Web page: http://128.118.178.162

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  1. Filip Palda, 2005. "Why Do Voters Demand Universal Government Benefits?," Public Economics 0503009, EconWPA.
  2. Ludger Schuknecht & Vito Tanzi, 1995. "The Growth of Government and the Reform of the State in Industrial Countries," IMF Working Papers 95/130, International Monetary Fund.
  3. Piggott, John & Whalley, John, 1987. "Interpreting Net Fiscal Incidence Calculations," The Review of Economics and Statistics, MIT Press, vol. 69(4), pages 685-94, November.
  4. Davies, James B & St-Hilaire, France & Whalley, John, 1984. "Some Calculations of Lifetime Tax Incidence," American Economic Review, American Economic Association, vol. 74(4), pages 633-49, September.
  5. Edgar K. Browning, 1993. "The Marginal Cost of Redistribution," Public Finance Review, , vol. 21(1), pages 3-32, January.
  6. Dodge, David A, 1975. "Impact of Tax, Transfer and Expenditure Policies of Government on the Distribution of Personal Income in Canada," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 21(1), pages 1-52, March.
  7. Maital, Shlomo, 1979. "Measurement of Net Benefits from Public Goods: A New Approach Using Survey Data," Public Finance = Finances publiques, , vol. 34(1), pages 85-99.
  8. Coate, Stephen & Morris, Stephen, 1995. "On the Form of Transfers in Special Interests," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1210-35, December.
  9. Jacob Meerman, 1980. "Are public goods public goods?," Public Choice, Springer, vol. 35(1), pages 45-57, January.
  10. Roll, Richard, 1977. "A critique of the asset pricing theory's tests Part I: On past and potential testability of the theory," Journal of Financial Economics, Elsevier, vol. 4(2), pages 129-176, March.
  11. Wittman, Donald, 1989. "Why Democracies Produce Efficient Results," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1395-1424, December.
  12. Aaron, Henry & McGuire, Martin, 1970. "Public Goods and Income Distribution," Econometrica, Econometric Society, vol. 38(6), pages 907-20, November.
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