Peacock and Buchanan's approaches to fiscal policy choices
The aim of the study concerns the analysis of public choices in terms of fiscal policies of a country or group of countries and the implications arising therefrom. In addition, the austere fiscal policies often used to cover negative flows due to high debt, excessive government spending, etc. do not consider the potential impact on growth that can be achieved by an increase of one point indirect and/or indirect taxation. Peacock (1971) with the work entitled “The Economic Analysis of Government and Related Themes” and Forte and Peacock (1981) with the work “The political economy of taxation” were the pioneers of the analysis of the dynamics of legislative structure and taxation choices in relation to the various stakeholders. In particular, the cited work analyzes the correlation between fiscal policy choices in legislation and relationships with citizens, with the electorate, with business, to analyze certain fiscal policy choices that offer a vision illusory of the real effect. In the identification of levels of optimal taxation it is essential to recall a study by Brennan and Buchanan (1977) “Towards a tax constitution for Leviathan” that analyzes the difficulties of transferring fiscal policy choices into practice in a real application and the perception of citizens of the impact of governments choices. Therefore, the aim of the study concerns maximization of the effects of a choice of optimal fiscal policy in order to avoid waste of resources that could functionally create growth and productivity. The intended aim of the following analysis concerns the identification of a path to better represent the dynamics of fiscal policies in relation to the theory of taxation than the actual tax that may be given by the use of a statistical model that tends to highlight econometric strengths and weaknesses of public choices. The selected reference literature is a useful tool for the study of this complex issue and for the definition of optimal taxation.
JEL: D72, E62, H30, H71.
Keywords: fiscal policy choices, optimal taxation, policymakers.