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Besley, Timothy, and
Torsten Persson. 2009. "The Origins of State Capacity: Property Rights, Taxation, and Politics."
,
99(4): 1218-44.
Show Article Details
DOI: 10.1257/aer.99.4.1218
Abstract: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. (JEL
D72, E62, H11, H20, P14)
Additional links:
Download Data Set
Authors:
Besley, Timothy (London School of Economics and CIFAR)
Persson, Torsten (Institute for International Economic Studies, Stockholm U and CIFAR)
JEL Classifications:
D72: Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
E62: Fiscal Policy
H11: Structure, Scope, and Performance of Government
H20: Taxation, Subsidies, and Revenue: General
P14: Capitalist Systems: Property Rights
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