scholarly journals How Do Political Institutions Affect Fiscal Capacity? Explaining Taxation in Developing Economies

2018 ◽  
Author(s):  
Roberto Ricciuti ◽  
Antonio Savoia ◽  
Kunal Sen
Keyword(s):  
Political Institutions ◽  
Developing Economies ◽  
Fiscal Capacity

scholarly journals How do political institutions affect fiscal capacity? Explaining taxation in developing economies

2018 ◽  
Vol 15 (2) ◽  
pp. 351-380 ◽  
Author(s):  
ROBERTO RICCIUTI ◽  
ANTONIO SAVOIA ◽  
KUNAL SEN
Keyword(s):  
Political Institutions ◽  
Developing Economies ◽  
Institutional Development ◽  
Checks And Balances ◽  
Fiscal Institutions ◽  
Fiscal Capacity ◽  
Long Run ◽  
Sector Performance ◽  
Tax Systems ◽  
Robust Evidence

AbstractA central aspect of institutional development in developing economies is building tax systems capable of raising revenues from broad tax bases, i.e. fiscal capacity. While it is recognised that fiscal capacity is pivotal for state building and economic development, it is less clear what its origins are and what explains its cross-country differences. We focus on political institutions, seen as stronger systems of checks and balances on the executive. Exploiting a recent database on public sector performance in developing economies and an IV strategy, we estimate their long-run impact, distinguishing between the accountability and transparency of fiscal institutions (impartiality) and their effectiveness in extracting revenues. We find that stronger constraints on the executive foster the impartiality of tax systems. However, there is no robust evidence that they also improve its effectiveness. Our findings also suggest that the overall impact on both total tax revenues and income tax is economically relevant.

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.

scholarly journals The Long-Run Effects of Oil Wealth on Development: Evidence from Petroleum Geology

2019 ◽  
Vol 129 (623) ◽  
pp. 2745-2778 ◽  
Author(s):  
Traviss Cassidy
Keyword(s):  
Political Institutions ◽  
Armed Conflict ◽  
Oil Production ◽  
Sedimentary Basins ◽  
Capacity Development ◽  
Fiscal Capacity ◽  
Internal Armed Conflict ◽  
Long Run ◽  
Per Capita ◽  
Oil Wealth

Abstract We estimate the long-run effects of oil wealth on development by exploiting spatial variation in sedimentary basins—areas where petroleum can potentially form. Instrumental variables estimates indicate that oil production impedes democracy and fiscal capacity development, increases corruption, and raises GDP per capita without significantly harming the non-resource sectors of the economy. We find no evidence that oil production increases internal armed conflict, coup attempts, or political purges. In several specifications failure to account for endogeneity leads to substantial underestimation of the adverse effects of oil, suggesting that countries with higher-quality political institutions and greater fiscal capacity disproportionately select into oil production.

scholarly journals Framing Metagovernance in the Context of Developing Democracies: An Institutionalist Viewpoint

2020 ◽  
Vol 10 (3) ◽  
pp. 91
Author(s):  
Athaulla A Rasheed
Keyword(s):  
Political Economy ◽  
Political Science ◽  
Political Institutions ◽  
Developing Economies ◽  
State Capacity ◽  
The State ◽  
The Political ◽  
Economic Activities ◽  
Developing Democracies

Metagovernance has traditionally been evolving as an effective mode of governance in developed democracies for states or governments to legitimately steer and coordinate stakeholder governance across jurisdictions. This article extend this work to understand the application of metagovernance in the context of developing democracies. Using an institutionalist viewpoint, the article explores the conceptual and empirical bases of metagovernance, drawing from the political science and political economy literature on developing economies to explain how political institutions can shape the state capacity to metagovern socio-economic activities in developing democracies. This article finds that the state capacity to metagovern can be challenged by weak democratic political practices.

THE IMPACT OF INSTITUTIONAL QUALITY ON MONETARY POLICY RESPONSE FUNCTION: EVIDENCE FROM DEVELOPED AND DEVELOPING ECONOMIES

2020 ◽  
pp. 1-25
Author(s):  
AIMAL KHAN KAKAR ◽  
MUHAMMAD ZEESHAN YOUNAS ◽  
WASIM SHAHID MALIK
Keyword(s):  
Political Institutions ◽  
Inflation Rate ◽  
Developing Economies ◽  
Institutional Quality ◽  
Threshold Level ◽  
Condition Index ◽  
Central Banks ◽  
Low Level ◽  
Monetary Authorities ◽  
The Impact

There is a plethora of empirical evidence available which postulates that the central banks across the world respond asymmetrically to inflation. The response of monetary authorities toward inflation changes, when it reaches a threshold level. After estimating the nonlinear Taylor rule for 51 countries over the period of 1983–2015, including 28 advanced economies and 23 emerging and developing economies, we come to the conclusion that the quality of political institutions has a significant impact on the threshold level of the inflation rate. In contrast to the countries with weak institutional quality, countries with high institutional quality have a very low level of inflation rate where monetary authorities change their behavior. Our finding further reveals that the countries with low corruption, stable governments, efficient bureaucracy and good socio-economic conditions have a very low level of inflation rate. Central banks respond aggressively in these countries when inflation exceeds a threshold level inflation rate. The socio-economic condition index has a greater impact on the inflation threshold level as compared to other sub-indexes of institutional quality. The findings imply that the improvement in institutional quality enables the central banks to keep inflation at a low level.

scholarly journals Financial Globalization, Output Gap and Foreign Output Gap on inflation: Evidenced from Developing Economies

2021 ◽  
Vol 7 (2) ◽  
pp. 411-425
Author(s):  
Muhammad Azhar Bhatti ◽  
Imran Sharif Chaudhry ◽  
Hafeez-ur- Rehman ◽  
Furrukh Bashir
Keyword(s):  
Low Income ◽  
Political Institutions ◽  
Inflation Rate ◽  
Developing Economies ◽  
Income Group ◽  
Output Gap ◽  
Middle Income ◽  
Middle Income Countries ◽  
Income Groups ◽  
Middle Income Group

This paper covers previous studies' deficiencies and re-examine the theoretical model using a heterogeneous panel GMM technique, which overcomes cross-section dependency. In the current sample of developing nations, developed two models'; model 1 consists of the domestic output gap, and the second model includes the foreign output gap. According to model 1, foreign globalization and imports boost the inflation level in developing countries and disaggregation analysis (low, lower-middle, and upper-middle-income countries). The output gap impedes inflation in overall, lower-middle, and upper-middle-income countries, while it boosts inflation in low-income nations. And unemployment level increases the inflation rate in the overall and middle-income groups, while in low- and high-income countries, it decreases. According to the second model, foreign globalization and the foreign output gap boost overall low-income, middle-income, and upper-middle-income groups. While import reduces the inflation level globally, while in low-income, middle-income, and upper-middle-income groups, it increases inflation. Finally, the unemployment level boosts the global inflation level and as well as in low income, and it impedes inflation rate in upper-middle-income group. Despite this, there is considerable variation in countries' effect, perhaps due to differences in political institutions' quality, central bank independence, exchange rate systems, financial development, and legal traditions.

scholarly journals Institutional Quality and Economic Performance in Nigeria: A New Evidence

2020 ◽  
Vol 8 ◽  
Keyword(s):  
Economic Performance ◽  
Political Institutions ◽  
Developing Economies ◽  
Institutional Quality ◽  
Output Growth ◽  
Policy Implications ◽  
Long Run ◽  
Ardl Approach ◽  
Relevant Variables ◽  
New Evidence

The question of whether institutional quality is an important driver of growth has been the subject of a growing literature in both developed and developing economies across the globe. This study revisits this relationship in Nigeria from 1981Q1 to 2016Q4 and discusses the relevant policy implications for post Covid-19 Nigeria. The study adopted the ARDL approach which uses a bounds test approach based on unrestricted error correction model (UECM) to test for a long run relationship among the relevant variables. The findings indicate that institutional quality impacts negatively but insignificantly on growth in Nigeria, both at the aggregate and sectoral levels. However, initial output growth levels, capital and labour were found to be important drivers of growth in the country, while trade is growth-retarding. The study concludes that in this post Covid-19 era in Nigeria, there is need to improve the quality of socio-economic and political institutions in the country so that a more robust impact of these institutions can be felt in the economic performance of the country both at the aggregate and sectoral levels.

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