The origins of state capacity: Property rights, taxation and policy
2009 (English)In: The American Economic Review, ISSN 0002-8282, E-ISSN 1944-7981, Vol. 99, no 4, 1218-1244 p.Article in journal (Refereed) Published
Economists generally assume that the state has sufficient institutional capacity to support markets and levy taxes. This paper develops a framework where "policy choices" in market regulation and taxation are constrained by past investments in legal and fiscal capacity. It studies the economic and political determinants of such investments, demonstrating that legal and fiscal capacity are typically complements. The results show that, among other things, common interest public goods, such as fighting external wars, as well as political stability and inclusive political institutions, are conducive to building state capacity. Some correlations in cross-country data are consistent with the theory.
Place, publisher, year, edition, pages
2009. Vol. 99, no 4, 1218-1244 p.
Models of Political Processes, Rent-seeking, Elections, Legislatures, Voting Behavior, Fiscal Policy
Research subject Economics
IdentifiersURN: urn:nbn:se:su:diva-36024DOI: 10.1257/aer.99.4.1218ISI: 000270480500006OAI: oai:DiVA.org:su-36024DiVA: diva2:288597