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This chapter argues that in countries with well-functioning democracies most individuals should be “content” with the underlying income distribution. The authors derive this result from James Buchanan’s notion of a “fiscal constitution.” The authors test this hypothesis using data from the World Values Survey where respondents are asked whether “incomes should be more equal …, or do we need larger differences in income as incentives?” The authors’ empirical results indicate that the concentration of re-distributional preferences around the median response is positively related to the presence of a democratic voice.

To explain a fiscal rule that functions in a different way from a constitutional ideal of a welfare state, as Japan's case, and to give a literary examination of that kind of thoughts in modern economics and theory of public finance.

Compares neo‐institutional economics and fiscal sociology about the role of a government, using recent fiscal data of developed countries.

For neo‐institutional economics it is difficult to explain “welfare state” that substitutes the role of a family because the approach can only explain a complementary relationship of organizations in higher levels with lower organizations.

Points out that neo‐institutional economics should be examined by a historical formation of each rule and a real legal system in each country.

Discusses institutional economics and fiscal sociology from an aspect of possibility of applying to the field of public finance and social welfare.

This paper investigates the impact of state governments’ “Tax and Expenditure Limits” (TELs) on their tax progressivity and redistributive spending. A two stage least squares (2SLS) regression model of data covering 1985-2007, was employed to allow for simultaneity in the relationships between intergovernmental transfer, tax progressivity, expenditure progressivity, and labor mobility. This model tested whether high- or low income residents had paid for and benefited from these fiscal institutions. As a result we find that TELs significantly decrease tax progressivity and increase poverty rate. These two policy effects should be explicitly accounted for in the design or revision of TELs.

Nobody concerned with political economy can neglect the history of economic doctrines. Structural changes in the economy and society influence economic thinking and, conversely, innovative thought structures and attitudes have almost always forced economic institutions and modes of behaviour to adjust. We learn from the history of economic doctrines how a particular theory emerged and whether, and in which environment, it could take root. We can see how a school evolves out of a common methodological perception and similar techniques of analysis, and how it has to establish itself. The interaction between unresolved problems on the one hand, and the search for better solutions or explanations on the other, leads to a change in paradigma and to the formation of new lines of reasoning. As long as the real world is subject to progress and change scientific search for explanation must out of necessity continue.

Federal systems are often more sophisticated than assumed in the literature. In many cases, at least three tiers of government are involved in federal decision making. The purpose of this paper is to cast some light on this increasingly important issue in fiscal federalism.

In a model with three tiers of government, the author analyzes corrective policies in the presence of fiscal externalities generated by federal redistribution.

The author identifies an additional qualitative incentive effect, particularly for intermediate governments. They behave strategically to attract additional redistribution funds from outside, though still using corrective policies to provide investment incentives toward their own regions. The results also suggest that differently from the USA the federal system of the EU may lead to inefficiently low regional investment.

The presented model is a first step toward analyzing strategic behavior and the effect of corrective policies in more complicated federal set ups with three tiers of government involved. This is relevant for federal structures such as Germany or the USA, as well as for government interactions at the international level.