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Evaluating Public Expenditures When Governments Must Rely on Distortionary Taxation

Опубликовано на портале: 04-11-2004
World Bank Policy Research Working Papers. 1998.  No. 1981.
We provide simple, robust operational rules for evaluating public expenditures in distorted economies. Our analysis integrates previous treatments of project evaluation as special cases within a clean unified framework. In particular, the border price rule developed in the shadow pricing literature requires very strong assumptions to be valid when governments must rely on distortionary taxation and are unable or unwilling to cover the costs of the project through user charges. We develop general project evaluation rules that are more complex than the border price rule, but involve only one additional parameter, the Marginal Cost of Funds.

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