The Perfect Finance Minister: Whom to Appoint as Finance Minister to Balance the Budget?

The role and influence of the finance minister within the cabinet are discussed with increasing prominence in the recent theoretical literature on the political economy of budget deficits. It is generally assumed that the spending ministers can raise their reputation purely with new or more extensive expenditure programs, whereas solely the finance minister is interested to balance the budget. Using a dynamic panel model to study the development of public deficits in the German states between 1960 and 2009, we identify several personal characteristics of the finance ministers that significantly influence budgetary performance. Namely her professional background seems to affect budget deficits. During times of fiscal stress, our results can guide prime ministers in the nominating of finance ministers in order to assure sound budgeting

Taxation and political stability

The present study is, in particular, an attempt to test the relationship between tax level and political stability by using some economic control variables and to see the relationship among government effectiveness, corruption, and GDP. For the purpose, we used the GMM (1991) and GMM system (1998), using a country-level panel data from 112 countries for the period 1997 to 2010. The main results show that political stability is not the key for the tax policy, under the control of political regime durability the taxes as percent in GDP having consistent sinusoidal tendency, by cubic type