Resumen de Sins of the elder: Fiscal illusion in democracies.

Paulo Reis Mourâo

• This work discusses the implications of democratic maturity on levels of Fiscal Illusion. Its main contribution is to identify the relevance of good-governance institutions that prevent incumbents in established democracies from degenerating into electoral rent-seekers. This work develops a model that converges with a Gordon (1989) type theorem. This theorem predicts that some countries ruled by incumbents are more likely to revert to FI practices as the electorate�s maturity increases and if there are no strong restrictions on the social acceptance of political rents. Our empirical results show that democratic maturity tends to diminish fiscal illusion.