Institutional Quality and Government Efficiency
Poorer countries have a much smaller public sector and correspondingly a smaller tax burden than richer countries, yet, their economic performance has not been necessarily better. Using a simple model, this paper suggests that the growth and welfare effects of taxation are mediated through institutional quality; consequently, optimal tax levels increase with improved institutional quality. The paper then employs firm-level perceptions on the quality of public services and on the tax burden to test some of the model¿s predictions. Consistent with these predictions, the paper finds that a higher level of institutional quality bolsters positive perceptions of the quality of public services while at the same time moderating the view of taxes as an obstacle to growth.
| Main Author: | |
|---|---|
| Other Authors: | |
| Format: | Working Papers biblioteca |
| Language: | English |
| Published: |
Inter-American Development Bank
|
| Subjects: | Public Utility, Fiscal Policy, H20 - Taxation Subsidies and Revenue: General, H41 - Public Goods, O10 - Economic Development: General, O17 - Formal and Informal Sectors • Shadow Economy • Institutional Arrangements, institutions, taxes, quality of public services, |
| Online Access: | http://dx.doi.org/10.18235/0011289 https://publications.iadb.org/en/institutional-quality-and-government-efficiency |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|