Comparative fiscal illusion: A fiscal illusion index for the European Union

Roberto Dell'Anno and Brian Dollery ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper provides an empirical analysis of fiscal illusion by estimating an index of fiscal illusion for 28 European countries over the period 1995–2008 employing a structural equation approach. Using MIMIC models, the paper investigates the main indicators of fiscal illusion and develops an index of fiscal illusion. It concludes that the chief deterninants for the deployment of fiscal illusion strategies are the share of self-employment on total employment, the educational level of citizens, and the size of tax burden. At the same time, policy makers attempt to ‘conceal’ the real tax burden by means of debt illusion, fiscal drag, wage withholding taxes, as well as taxes on labour.

Keywords: Fiscal illusion; Financial illusion; MIMIC model; European countries (search for similar items in EconPapers)
JEL-codes: H3 H8 O52 (search for similar items in EconPapers)
Date: 2012-11-09
New Economics Papers: this item is included in nep-eec, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Journal Article: Comparative fiscal illusion: a fiscal illusion index for the European Union (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:42537

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