SummaryThis paper reviews the literature and contributes with some evidence based on the World Values Survey on the drivers of tax morale worldwide, with an emphasis on developing countries. It shows that socio-economic factors such as age, religion, gender, employment status and educational attainment have a significant impact on people's levels of tax morale. In terms of institutional determinants, satisfaction with democracy, trust in government and the satisfaction with the quality of public services play an important role in increasing tax morale. The paper also discusses future directions for research and policy action in this area.
In this paper we apply the meta-regression technique to survey the empirical literature on the economic incidence of labour taxes and social security contributions. In particular, we focus on the effects of taxation on wages to test the conventional view that employees bear the burden due to lower net wages. Based on 52 empirical papers, we find that economic institutions, the tax wedge definition, and the temporal focus significantly affect the results. In the long run, workers bear between two thirds of the tax burden in Continental and Anglo-Saxon economies, and nearly 90 % in the Nordic economies. However, despite the numerous set of controlling variables, a significant part of the variability of the empirical literature remains unexplained.
This paper analyses fiscal policy for several economies in Latin America, from the early nineties to the 2009 crisis. We present original estimates of cyclically-adjusted public revenues for Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Peru and Uruguay implementing the standardised OECD methodology and extending it to include commodity cycles, which have a direct and significant effect on the fiscal balance of several Latin American countries. Based on these estimates, we evaluate the size of automatic tax stabilisers and the cyclicality of discretionary fiscal policy. Additionally, we highlight the uncertainty stemming from the estimation of the output gap, due to large and simultaneous cyclical, temporary and permanent shocks in several Latin American economies. JEL E62, H30, H60
A stronger macroeconomic position when the financial crisis erupted allowed Latin American economies to mitigate its impact through fiscal expansions, temporarily reversing the characteristic procyclical behaviour of fiscal policy. At the same time, in the last two decades fiscal rules have been extensively adopted in the region. This paper analyses the stabilising role of discretionary fiscal policy over time, and the influence of fiscal financing conditions and of fiscal rules in said behaviour for a sample of eight Latin American economies. The analysis shows three main results: i) fiscal policies became countercyclical during the crisis, but they have turned procyclical again in recent years; ii) financing conditions are the key driver of fiscal procyclicality, while iii) fiscal rules tend to neutralise it. la Política Fiscal y el ciclo económico en américa latina: el PaPel de las condiciones Financieras y las reglas Fiscales resumen La crisis financiera fue enfrentada por América Latina con una posición macroeconómica más sólida, lo que permitió mitigar su impacto con una expansión fiscal, en contraste con la tradicional prociclicidad de las políticas fiscales. Asimismo, en las últimas dos décadas ha proliferado el establecimiento de reglas fiscales en la región. Este artículo analiza el papel estabilizador de la política fiscal discrecional, y la influencia de las condiciones financieras y las reglas fiscales en tal comportamiento para ocho países de América Latina. El análisis obtiene tres principales resultados: i) la política fiscal fue contracíclica durante la crisis, y volvió a ser procíclica posteriormente; ii) las condiciones financieras determinan la prociclicidad de la política fiscal, mientras que iii) las reglas fiscales tienden a neutralizarla. JEL Classification H3 G1 Keywords procyclical fiscal policy fiscal rules financing conditions Latin America Clasificación JEL H3 G1 Palabras claves política fiscal procíclica reglas fiscales condiciones financieras América Latina * Alberola works at Bank for International Settlements; Kataryniuk: Bank of Spain; Melguizo and Orozco: OECD Development Centre. We wish to thank seminar participants at the Bank of Spain, the LACEA-LAMES 2014 Annual Meeting, Fedesarrollo, the IMF Fiscal Affairs and Western Hemisphere departments, and the IDB Research Department for their useful comments, and in particular, the insights and conversations with Teresa Ter-Minassian and Gustavo Garcia.
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