Fiscal illusion Mourao (2008) attempts to quantify fiscal illusion empirically for almost 70 democracies since 1960. Fiscal illusion Fiscal illusion is a public choice theory of government expenditure first developed by the Italian economist Amilcare Puviani in his 1903 book "Teoria della illusione finanziaria" ("Theory of Financial Illusion" (not yet translated into English, but translated into German in 1960 under the title "Die Illusionen in der öffentlichen Finanzwirtschaft", Berlin: Dunker & Humblot, 1960)). Fiscal illusion suggests that when government revenues are not completely transparent or are not fully perceived by taxpayers, then the cost of government is seen to be less than
Fiscal federalism in a particular country, can be determined by using certain criteria that the author has evolved. The kind of policy solution to be applied will depend on the nature of asymmetry (VFA). Thus, there can be three types of VFAs: The VFI-VFG-VFD offers a nice framework to understand and debate issues surrounding fiscal federalism. VFD is a concept that has entered the lexicon of fiscal federalism and has the power to clarify the debate on intergovernmental financial relations. Vertical Fiscal Gap as the revenue deficiency arising from a mismatching between revenue means and expenditure needs. OECD Network on Fiscal Relations