ELECTORAL MOTIVES, PARTISAN MOTIVES AND DYNAMIC OPTIMALITY WITH MANY TAXES: AN INTERNATIONAL INVESTIGATION

Dimitris Christopoulos, John (Ioannis) Loizides and Mike Tsionas

Scottish Journal of Political Economy, 2009, vol. 56, issue 1, 94-113

Abstract: In this paper, we argue that tax‐smoothing results based on total tax revenues may be of limited importance if in fact governments are concerned with the inter‐temporal distortionary effects of many kinds of taxes, when electoral and partisan motives also have to be taken into account. We develop an inter‐temporal model that predicts that tax revenue mix should follow random walks. The model is tested with international data using both time series and panel‐based unit root tests. We find that during the examined period, 1973–2003, governments are not optimizing tax components in the sense of Barro.

Date: 2009
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https://doi.org/10.1111/j.1467-9485.2009.00474.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:scotjp:v:56:y:2009:i:1:p:94-113

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