Seiferling, Michael
(2012)
Essays on the political economy of public finance: taxation and debt.
PhD thesis, London School of Economics and Political Science.
Abstract
The granting of discretionary budgeting powers to policymakers whose utility functions do
not match those of the societies they govern, may lead to sub-optimal fiscal outcomes which
require the creation of binding and credible commitments to rectify. Past research into the
institutional constraints placed upon, and behaviour of, policymakers has shown that these do,
in fact, generate real effects on macroeconomic performance. Optimal fiscal systems, in this
sense, become reliant on having in place an institutional framework which structurally induces
social welfare maximizing outcomes.
This thesis provides both a historical overview of the birth of modern public finance as well
as an in depth examination of both theoretical and empirical contributions to tax theory with a
full statistical analysis of the multidimensional determinants of compositional systems of budget
equations from the revenue side, observed across 90 states between 1990-2008. There is also
the somewhat neglected area of finite planning horizons in public finance, where policymaker
discount factors may lead to sub-optimal dynamic fiscal outcomes; mainly, the accumulation
of public debt. Theoretical expectations have been difficult to statistically validate due to
unobservable transition likelihoods and endogeneity problems which are overcome in this paper
revealing significant discount effects on the accumulation of debt. Lastly, the recent popularity of
budget rules in many of the world's economies has led to questions regarding their effectiveness
where pro
igate governments may be less likely to adopt budget rules that constrain their
budgeting powers. Empirical findings suggest that rule adoption is partially determined within
the equation of fiscal performance, making it difficult to identify the 'true' effects of budget rule
adoption, as well as whether these are of first or second order.
Actions (login required)
 |
Record administration - authorised staff only |
Download statistics
Download statistics