Serving two masters: The effect of state religion on fiscal capacity

Antonis Adam and Sofia Tsarsitalidou

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper, we examine the effect of having a state religion on fiscal capacity. Our analysis extends the legitimization argument, which postulates that state religion legitimizes the revenue-raising motives of the state. We estimate (i) a simple OLS model, and (ii) potential outcome models, to model the selection to observables, using both recent and historical data. Our empirical results suggest that countries with a state religion have lower levels of fiscal capacity. We then build a simple theoretical model, consistent with our empirical results, and show that countries with a state religion face lower incentives to invest in fiscal capacity as they are able to raise revenue through the legitimizing power of the church.

Keywords: Fiscal Capacity; State Religion (search for similar items in EconPapers)
JEL-codes: E62 H20 (search for similar items in EconPapers)
Date: 2019-09-24
New Economics Papers: this item is included in nep-mac and nep-ore
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Related works:
Journal Article: Serving two masters: the effect of state religion on fiscal capacity (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:101857

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