Towards a Fiscal Illusion Index

Paulo Mourão

MPRA Paper from University Library of Munich, Germany

Abstract: This paper presents an index of Fiscal Illusion for 68 democratic countries from 1960 to 2006. The studied Fiscal Illusion is the one related to a wrong perception of the budget aggregates according to the voters and taxpayers’ perspectives. In the construction of the index, methodological issues were carefully taken into account. The results obtained reveal that fiscal illusion varies greatly around the world. Countries such as Mali, Pakistan, Russia and Sri Lanka have the highest average values over the time period considered; while Austria, Luxembourg, Netherlands and New Zealand have the lowest. Regarding the time dimension, between 1980 and 1995 there was a significant decrease in the average value of the index across countries, suggesting a reduction in the adoption of fiscal illusion measures during this period. After 1995, the index remained stable in most of the countries.

Keywords: Fiscal Illusion; Indexes/Indicators; Democracy (search for similar items in EconPapers)
JEL-codes: C82 E62 H11 H30 (search for similar items in EconPapers)
Date: 2007-11, Revised 2008-07-28
New Economics Papers: this item is included in nep-cwa, nep-mac and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:9760

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