Tax Me, but Spend Wisely? Sources of Public Finance and Government Accountability

Lucie Gadenne

American Economic Journal: Applied Economics, 2017, vol. 9, issue 1, 274-314

Abstract: Existing evidence suggests that extra grant revenues lead to little improvements in public services in developing countries--but would governments spend tax revenues differently? This paper considers a program that invests in the tax capacity of Brazilian municipalities. Using variations in the timing of program uptake, I find that it raises local tax revenues and that the increase in taxes is used to improve both the quantity and quality of municipal education infrastructure. In contrast, increases in grants over which municipalities have the same discretion as taxes have no impact on any measure of local public infrastructure. These results suggest that the way governments are financed matters: governments spend increases in tax revenues more toward expenditures that benefit citizens than increases in grant revenues.

JEL-codes: H71 H75 H76 I21 I22 O15 R51 (search for similar items in EconPapers)
Date: 2017
Note: DOI: 10.1257/app.20150509
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (66)

Downloads: (external link)
https://www.aeaweb.org/articles?id=10.1257/app.20150509 (application/pdf)
https://www.aeaweb.org/articles/attachments?retrie ... XRmgf5LrzpAGA-Thcj5- (application/zip)
https://www.aeaweb.org/articles/attachments?retrie ... qLawqXWesW2AoAukc1Ea (application/pdf)
https://www.aeaweb.org/articles/attachments?retrie ... SMqatCp9jP3cDqPnsY9j (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Tax Me, But Spend Wisely? Sources of Public Finance and Government Accountability (2016)
Working Paper: Tax Me, But Spend Wisely? Sources of Public Finance and Government Accountability (2016)
Working Paper: Tax Me, But Spend Wisely? Sources of Public Finance and Government Accountability (2016)
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:aea:aejapp:v:9:y:2017:i:1:p:274-314

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Journal: Applied Economics is currently edited by Alexandre Mas

More articles in American Economic Journal: Applied Economics from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().