The Study of Governments Fiscal Capacities Effects

Pazhooyan , Jamshid; Mohammadi, Ahmad

Journal of Tax Research

Scholarly Quarterly of Iranian National Tax Administration (INTA)

Fri, Apr 19, 2024 | فارسی [Archive]

Volume 20, Issue 13 (2012) J Tax Res 2012, 20(13): 9-44 | Back to browse issues page

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Pazhooyan J, Mohammadi A. The Study of Governments Fiscal Capacities Effects. J Tax Res 2012; 20 (13) :9-44
URL: http://taxjournal.ir/article-1-65-en.html

The Study of Governments Fiscal Capacities Effects

Jamshid Pazhooyan¹

, Ahmad Mohammadi ^*

1- Faculty Member of Allameh Tabatabaee University
2- PhD Candidate of Allameh Tabatabaee University , mohammadiahm@gmail.com

Abstract: (7224 Views)

Growing literature of economic growth and development shows that government abilities to raise revenue from taxes or fiscal capacity is a fundamental cause of the economic development. In this paper, we use differences in historical external wars to estimate the effect of fiscal capacity on income per capita. Historical and economic literature shows that countries not only have different experiences of historical external wars but also in order to wage those wars they had invested in their fiscal capacity. Exploiting differences in the share of days from 1816 to 1900 that a country was involved in an external military conflict as an instrument for fiscal capacity, we estimate large effects of fiscal capacity on income per capita. The results are robust to the inclusion of controls for the geography, democracy, openness, legal origins, religion, fractionalization, outliers, different instruments for fiscal capacity, and different indexes for fiscal capacity.

Keywords: Fiscal Capacity, Historical External Wars

Full-Text [PDF 571 kb] (1695 Downloads)

Type of Study: Research |
Received: 2012/05/6 | Accepted: 2012/06/13 | Published: 2014/03/8