The causal effects of rule of law & property rights on fiscal capacity

Robin Grier (), Andrew T. Young and Kevin Grier

European Journal of Political Economy, 2022, vol. 74, issue C

Abstract: How have governments in rich countries developed the ability to levy taxes on their citizens and achieve high compliance? While it may seem simple, the process of developing fiscal capacity is often long and torturous. We explore the possibility that governments build this capacity in part by making a credible commitment to strong property rights under the rule of law. We identify large, sustained jumps in how countries score on both broad and narrow measures of legal system and property rights quality and investigate if these jumps produce increases in several measures of fiscal capacity. In a sample of 119 countries from 1970 to 2015, we find sustained improvements in property rights do not cause increases in any of our fiscal capacity measures. If the development of strong property rights is indeed necessary for developing fiscal capacity, it is evidently not sufficient.

Keywords: Fiscal capacity; State capacity; Property rights; Rule of law; Credible commitments; Matching methodologies (search for similar items in EconPapers)
JEL-codes: H10 O10 P00 P48 P51 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0176268021001361
Full text for ScienceDirect subscribers only

Related works:
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:eee:poleco:v:74:y:2022:i:c:s0176268021001361

DOI: 10.1016/j.ejpoleco.2021.102169

Access Statistics for this article

European Journal of Political Economy is currently edited by J. De Haan, A. L. Hillman and H. W. Ursprung

More articles in European Journal of Political Economy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().