On the microeconomic foundations of macroeconomics in the Hayek–Keynes controversy

2008 ◽  
Vol 15 (1) ◽  
pp. 105-127 ◽  
Author(s):  
Abdallah Zouache
Keyword(s):  
Microeconomic Foundations

Fiscal Capacity

2011 ◽  
Author(s):  
Timothy Besley ◽  
Torsten Persson
Keyword(s):  
Public Finance ◽  
Political Institutions ◽  
State Building ◽  
Political Factors ◽  
Role Of Government ◽  
Fiscal Capacity ◽  
Common Interests ◽  
To Come ◽  
Microeconomic Foundations

This chapter explores the forces that shape investments in fiscal capacity. It sets out a core model that shows how this aspect of state building is influenced by economic and political factors, such as common interests and political institutions. A key feature of the model has been to delineate the types of states that can emerge in equilibrium. It also shows that the model can be given microeconomic foundations and demonstrates how it can be extended in a number of directions that lead to more realism. The main focus of the chapter has been on the extractive role of government and on some of the issues raised in traditional public-finance models. This has laid the groundwork for the analyses to come.

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