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.
| Identifer | oai:union.ndltd.org:bl.uk/oai:ethos.bl.uk:550773 |
| Date | January 2012 |
| Creators | Seiferling, Michael |
| Publisher | London School of Economics and Political Science (University of London) |
| Source Sets | Ethos UK |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
| Source | http://etheses.lse.ac.uk/358/ |
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