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Research Department Working Papers, Inter-American Development Bank >
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http://hdl.handle.net/10419/51529
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| Title: | | Institutional quality and government efficiency  |
| Authors: | | Chong, Alberto Gradstein, Mark |
| Issue Date: | | 2007 |
| Series/Report no.: | | Working paper // Inter-American Development Bank, Research Department 606 |
| Abstract: | | 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. |
| Subjects: | | Institutions Taxes Quality of Public Services |
| JEL: | | H20 H41 O10 O17 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Research Department Working Papers, Inter-American Development Bank
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