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A Dynamic Model Of Taxation, Corruption, And Public Investment In The Dynastic Cycle: The Case Of Imperial China

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  • Chan, Kenneth S.
  • Laffargue, Jean-Pierre

Abstract

This paper develops a stochastic growth model that reproduces the main stylized facts of Imperial China's dynastic cycle—in particular, the time path of taxation, public spending, and corruption and their attendant impacts on production and income distribution. In this model, the emperor uses part of his tax income to finance the building of public capital and administrative institutions. This “institutional capital” enhances the productivity of the economy and limits extortion by the county magistrates. The dynastic cycle is driven by random shocks to the authority of the emperor and his central administration, which change the efficiency of institutional capital.

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  • Chan, Kenneth S. & Laffargue, Jean-Pierre, 2016. "A Dynamic Model Of Taxation, Corruption, And Public Investment In The Dynastic Cycle: The Case Of Imperial China," Macroeconomic Dynamics, Cambridge University Press, vol. 20(8), pages 2123-2147, December.
    • Handle: RePEc:cup:macdyn:v:20:y:2016:i:08:p:2123-2147_00
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    Cited by:

    1. Chan, Kenneth S. & Laffargue, Jean-Pierre, 2016. "Plunder and tribute in a Malthusian world," Mathematical Social Sciences, Elsevier, vol. 84(C), pages 138-150.
    2. Haiwen Zhou, 2023. "Unification and Division: A Theory of Institutional Choices in Imperial China," Annals of Economics and Finance, Society for AEF, vol. 24(1), pages 13-37, May.
    3. Lu, Peng & Yang, Hou & Li, Mengdi & Zhang, Zhuo, 2021. "The sandpile model and empire dynamics," Chaos, Solitons & Fractals, Elsevier, vol. 143(C).

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