Weak States and Steady States : The Dynamics of Fiscal Capacity
نویسنده
چکیده
Investments in fiscal capacity—economic institutions for tax compliance—are an important feature of economic development. This paper develops a dynamic model to study the evolution of over time. We contrast a social planner’s investment path with politically feasible paths. Three types of states emerge in the long run: a commoninterest state where public resources are devoted to public goods, a redistributive state where additional fiscal capacity is used for transfers, and a weak state with no transfers and a low level of public goods provision. We also present some preliminary evidence consistent with the theory. (JEL E23, E62, H23, H26, H41)
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