Democracy, State Capacity and Public Finance

Joshy Easaw () and Samuli Lepp l ()
Additional contact information
Joshy Easaw: Cardiff Business School, https://www.cardiff.ac.uk/people/view/609349-easaw-joshy
Samuli Lepp l: Cardiff Business School, https://www.cardiff.ac.uk/people/view/609449-leppala-samuli
Authors registered in the RePEc Author Service: Samuli Mikael Leppälä

No E2019/19, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

Abstract: The purpose of this paper is to consider the determinants of state capacity investments and public finance in societies with different intensities of democracy. Specifically, we consider the implications of political (dis)parity between the political parties as well as voter groups for state capacity investments, public goods provision, preferential tax policies between the elites and citizens, and the ability of the incumbent government to accrue political rents. The paper provides a unified framework to study the direct and indirect effects of democracy by combining state capacity investment and probabilistic voting. Paradoxically, while stronger electoral contestability leads to higher public good provision and lower political rents, it deteriorates the incumbent s incentive to invest in state capacity. Similarly, when increased political inclusivity between the voters leads to higher public good provision and lower political rents, it will have a negative effect on state capacity. Conversely, if the effect of inclusivity on state capacity investment is positive, then public good provision will decline.

Keywords: democracy; state-capacity investment; electoral bias; political inclusivity; political rents; public goods provision (search for similar items in EconPapers)
JEL-codes: D72 H10 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2019-12
New Economics Papers: this item is included in nep-cdm and nep-pol
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://carbsecon.com/wp/E2019_19.pdf (application/pdf)

Related works:
Journal Article: Democracy, state capacity and public finance (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cdf:wpaper:2019/19

Access Statistics for this paper

More papers in Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section Contact information at EDIRC.
Bibliographic data for series maintained by Yongdeng Xu ().