TY - JOUR

T1 - Bureaucracy, tax system, and economic performance

AU - Ott, Ingrid

PY - 2006/12/1

Y1 - 2006/12/1

N2 - This paper investigates the consequences for government size, growth and welfare if a selfish bureaucracy provides a congested input. Alternative exogenous tax systems are introduced and numerical analyses are carried out. The welfare optimum is only met under very specific assumptions: proportional congestion, a tax system only consisting of distortionary taxes and a bureaucracy that maximizes the budget's growth rate. Otherwise the relative size of the public sector becomes suboptimally large thus inducing welfare losses. From a welfare economic point of view bureaucratic selfishness is worse than a suboptimal taxing regime that does not (completely) internalize the congestion externalities.

AB - This paper investigates the consequences for government size, growth and welfare if a selfish bureaucracy provides a congested input. Alternative exogenous tax systems are introduced and numerical analyses are carried out. The welfare optimum is only met under very specific assumptions: proportional congestion, a tax system only consisting of distortionary taxes and a bureaucracy that maximizes the budget's growth rate. Otherwise the relative size of the public sector becomes suboptimally large thus inducing welfare losses. From a welfare economic point of view bureaucratic selfishness is worse than a suboptimal taxing regime that does not (completely) internalize the congestion externalities.

KW - Economics

UR - http://www.scopus.com/inward/record.url?scp=84892647131&partnerID=8YFLogxK

UR - https://www.mendeley.com/catalogue/d16d9388-6acc-31f6-afcd-42ed1a2520a9/

U2 - 10.1111/j.1467-9779.2006.00291.x

DO - 10.1111/j.1467-9779.2006.00291.x

M3 - Journal articles

AN - SCOPUS:84892647131

VL - 8

SP - 839

EP - 862

JO - Journal of Public Economic Theory

JF - Journal of Public Economic Theory

SN - 1097-3923

IS - 5

ER -