Using surveys of business perceptions as a guide to growth-enhancing fiscal reforms

Florian Misch, Norman Gemmell and Richard Kneller

No 13-012, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: This paper assesses the merits of using surveys of business perceptions of growth constraints as a guide to growth-enhancing fiscal policy reforms. Using endogenous growth models in which the government levies an income tax to provide public inputs to the production of private firms, the paper demonstrates that business perceptions of growth constraints are subject to systematic biases except when firms compare different types of public services or different types of public capital. In particular firms can be expected to systematically over-estimate the growth-enhancing effects of lower tax rates, and under-estimate the growth-enhancing effects of greater provision of public capital. It is then shown that these theoretical predictions regarding how firms rank constraints correspond closely to the observed ranking of constraints by firms in the World Bank's Enterprise Surveys.

Keywords: Economic Growth; Fiscal Policy; Imperfectly Informed Governments; Business Perceptions; Diagnostics; Subjective Data (search for similar items in EconPapers)
JEL-codes: D20 E62 O12 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-fdg and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/71070/1/739698087.pdf (application/pdf)

Related works:
Journal Article: Using surveys of business perceptions as a guide to growth-enhancing fiscal reforms (2014)
Working Paper: Using Surveys of Business Perceptions as a Guide to Growth-Enhancing Fiscal Reforms (2014)
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:zbw:zewdip:13012

Access Statistics for this paper

More papers in ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().