Peer-Reviewed Journal Details
Mandatory Fields
Baturo, A;Gray, J
2009
January
European Journal of Political Research
Flatliners: Ideology and rational learning in the adoption of the flat tax
Published
15 ()
Optional Fields
GOVERNMENT DEBT INFORMATIONAL CASCADES POLITICAL-ECONOMY POLICY DIFFUSION REFORM LIBERALIZATION GLOBALIZATION COMPETITION BEHAVIOR DEFICITS
48
130
159
What factors explain the wave of adoption of the flat tax in Eastern Europe? It is argued in this article that, once the first few successes were underway, governments with liberal outlooks toward taxation adopted the reform through a process of rational learning: an often radically new government will tend to adopt the policy based on successful implementation of its neighbours. The issue of policy diffusion is approached by explicitly modeling the different mechanisms that might underlie the process. Little evidence is found for pure 'bandwagoning' in the adoption of the flat tax - the presence of other market-minded reforms do not predict adoption of the flat tax, and contagion measures do not capture the dynamics of the adoption of the reform. Instead, rational learning, where economically right-wing governments evaluated the success of the reform (as measured by their ability to attract foreign investment) in the medium term, plays the largest role. Rational emulation in a shorter time period contributes to the probability of adoption as well, as does a change to an economically liberal ideology.
HOBOKEN
0304-4130
10.1111/j.1475-6765.2008.00830.x
Grant Details