Fabio Padovano

Comparing the growth effects of marginal vs. average tax rates and progressivity

Abstract The paper compares the appropriateness and explanatory power of marginal tax rates, average tax rates and tax progressivity as measures of the impact of taxation on growth. Data are organized as a panel of 25 industrialized countries from 1970 to 1998. Contrary to previous empirical research, but consistently with theory, we find that marginal effective tax rates and tax progressivity have a negative influence on economic growth. This negative correlation turns out to be robust after controlling for state and policy variables. Average tax rates, on the other hand, seem not to affect output dynamics.

Judicial Branch, Checks and Balances and Political Accountability

This paper attempts to combine the political economics models on separation of powers between the legislature and the executive with public choice theories on the behavior of the judicial branch. We obtain a model of political accountability and checks and balances with up to three government branches: the executive, the legislature and the judiciary. We conclude that an independent judiciary improves the political accountability of democratic systems relative to the political economics models with two government branches. An accommodating judiciary, however, changes the distribution of political rents without improving accountability.

The Determinants of Judicial Independence: Evidence from the Italian Constitutional Court (1956-2002)

This paper tests the explanatory power of alternative theories on the determinants of judiciary independence using annual and decision-based data on the Italian Constitutional Court. The estimates show that structural measures of judiciary independence, such as the share of constitutional judges elected by theranks of the professional judiciary and the age of justices, are positively correlated with independent behavior of the Court. Contrary to previous studieson a similar sample, we find that the Court counteracts the greater cohesion of the other government branches with more independent behavior, improving theeffectiveness of the system of checks and balances.

Do Fiscal Decentralization and Government Fragmentation Affect Corruption In Different Ways? Evidence from a Panel Data Analysis

Are countries characterized by more decentralized fiscal and spending powers less corrupt? Or is a higher degree of government fragmentation a more effective way to deter corruption? Is there any evidence that these alternative ways to enhance government accountability reinforce each other? This paper tries to answer these questions by using several indicators of government fragmentation and fiscal decentralization for a panel of 23 countries in the 1995-2007 time interval. Taken separately, while various measures of government fragmentation do not seem to affect corruption in any significant way, fiscal decentralization measured as fiscal and spending autonomy does seem to reduce corruption. This latter effect is reinforced if fiscal decentralization is combined with a high degree of government fragmentation at the local level. The results appear robust to different specifications of the empirical model.

Would You Trust an Italian Politician? Evidence from Italian Regional Politics

This chapter evaluates the erosion of electoral accountability of the “Governors” of the Italian Regions in three subsequent political moments: (1) the elections, (2) the inaugural speeches of the Governor, (3) their first important policy decision, the long-term regional budget (DPEFR). We use content analysis (Laver et al. 2003) to assess the position of each Governor on a left to right distribution at the moment of the inaugural speeches and of the DPEFR. We then analyze the correlation between the distributions of (1) the electoral results and the inaugural speeches and (2) the inaugural speeches and the DPEFR, under the hypothesis that greater similarity can be interpreted as greater accountability. The analysis detects some erosion of accountability from the elections to the inaugural speeches, and a more serious one from the inaugural speeches to the DPEFR. A series of ANOVA tests suggest that the Region’s relative economic position/dependency on transfers from the central governments partly explains such loss of accountability.

The Dictatorship of the Popes

This paper takes the view that theocracies are essentially a form of dictatorship and verifies whether this interpretation is empirically supported when applied to the longest lasting example of theocracy, the temporal power of the Popes. The length of its record and the many historical shocks it had to face reveal information about the incentives and constraints that characterize it. We use this information to test some of the predictions of a theory of dictatorship about the durability of, and the source of opposition to the various regimes on data about the Papacy. The results appear to support the theory.

Legislative Cycles in a Semipresidential System

The Political Legislation Cycle theory predicts a peak of legislative production in the pre-electoral period, when the legislator focuses on voters’ welfare to be reelected. This paper tests the theory on the French semipresidential system, characterized by direct election of both the executive and the legislature. We use a dataset that encompasses all the approved voted legis-lation in France from 1959 to 2012 at a monthly rate, and find a dual cycle of the production of laws, connected to both the presidential and the legislative elections.

Setting House Taxes by Italian Municipalities: What the Data Say

This paper: 1) discusses the main hypothesis on the interaction among local governments in setting tax rates; 2) reviews the empirical tests of this literature based on data about Italian municipalities; 3) presents a new data set on the fiscal variables of Italian municipalities that covers the 1993-2001 time interval for all municipalities, and offers some descriptive statistics of the evolution of local fiscal choices in Italy; 4) performs some preliminary tests of the theories about tax setting by local governments using this data set. JEL classification: C51; D72; H71

Theocracy, Natural Spiritual Monopoly, and Dictatorship

The chapter looks at the behavior of theocracy. We first look at religion, and the reasons why people adopt religious beliefs. In particular we try to understand why people tend to believe in one God. We look at two motivations, the desire for solidarity with a group with common beliefs, and the individualistic desire for an afterlife. Then we turn to dictatorship. Section 4.2 outlines Wintrobe’s (1990, 1998) model of dictatorship. Section 4.3 extends this model to explain the behavior of theocracy, a subject not considered previously. Extending a model developed to understand twentieth century dictatorships to understand the behavior of Calvin or the Papacy might strike the reader as outlandish, and we understand that skepticism. Nevertheless, we believe that the exercise yields some light. On the positive side, looking at a regime such as the Papal States that lasted more than 1,300 years provides a sample unmatched in modern times on which to discuss the implications of a theory of theocracy.

Leviathan Models of Government

Geoffrey Brennan and James Buchanan first developed the Leviathan model of government, in their 1980 book The Power to Tax. In this early formulation government is assumed to act as a monopolist that maximizes tax revenues. Such representation is driven by the other fundamental assumption that the authors make, namely, that rational ignorance, fiscal illusion and outright collusion among elected officials deprive taxpayers-voters of any control they may have over government. Hence the reference to Hobbes’ Leviathan. In The Power to Tax, Brennan and Buchanan develop the fiscal consequences of the revenue maximizing government and point out the constitutional provisions that may hinder the Leviathan in its drive to appropriate taxpayers’ resources.