eprintid: 3894
rev_number: 10
eprint_status: archive
userid: 6
dir: disk0/00/00/38/94
datestamp: 2018-02-05 10:15:50
lastmod: 2018-02-05 10:15:50
status_changed: 2018-02-05 10:15:50
type: monograph
metadata_visibility: show
creators_name: Belmonte, Alessandro
creators_name: Teobaldelli, Désirée
creators_name: Ticchi, Davide
creators_id: alessandro.belmonte@imtlucca.it
creators_id: 
creators_id: 
title: Tax Morale, Fiscal Capacity, and Wars
ispublished: pub
subjects: HB
divisions: EIC
full_text_status: public
monograph_type: imt_eic_working_paper
keywords: Keywords: tax morale, state capacity, external threat, civil wars, dynamic complementarity,
culture and institutions.  -  JEL Classification: P16, H11, H26, H41
abstract: This paper studies how mobilization for war motivates citizens to contribute to their
own community and therefore help forming tax morale in a constituency. We derive a
theoretical model to investigate government's decision to expand tax revenues from alternative
sources, namely changing the country's culture of tax compliance or expanding
fiscal capacity. Despite the two are initially substitute, we show how in equilibrium dynamic
complementarity arises. Our mechanism exploits exogenous variation in the cost of
tax morale formation, induced by an expected war (either internal or external) that makes
easier for the government to mobilize the constituency. We motivate our theory through a
novel cross-country analysis that uses information on war frequency, tax morale, and fiscal
capacity. We additionally discuss some historical cases consistent with our mechanism.
date: 2018-02
date_type: published
number: 3
publisher: IMT School for Advanced Studies Lucca
pages: 44
institution: IMT School for Advanced Studies Lucca
issn: 2279-6894
citation:   Belmonte, Alessandro and Teobaldelli, Désirée and Ticchi, Davide  Tax Morale, Fiscal Capacity, and Wars.  EIC working paper series  #3/2018    IMT School for Advanced Studies Lucca    ISSN 2279-6894.      
document_url: http://eprints.imtlucca.it/3894/1/EIC_WP_3_2018.pdf