Costs of taxation and the size of government
Journal article, Peer reviewed
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Existing theory on the form of government suggests that a parliamentary system promotes a larger size of government than does a presidential system. This paper extends the existing theory by allowing for distortionary taxation. A main result is that if taxation is sufficiently distortionary, the parliamentary system may promote a smaller size of government than the presidential system. The proposed mechanism appears consistent with several empirical patterns in the data that cannot be explained by other theories.
This is the author’s final, accepted and refereed manuscript to the article. The final publication is available at www.springerlink.com