This book is one of the two volumes of essays especially written to honor Vito Tanzi. The articles included in this volume and in its companion (Fiscal Policies and Economic Reforms) were selected from more than 60 papers submitted for this project by many renowned world specialists in public finance. The selection of papers was performed with the help of an Advisory Board composed of Professors Richard M. Bird, Arnold Harberger, Richard Musgrave, and Sweder Van Wijnbergen. The prominence of the scholars who accepted to serve on the board, as well as the fact that so many distinguished colleagues submitted their contributions, and that those which were accepted could be divided naturally into two volumes covering quite different dimensions of fiscal policies, are all testimonies of the respect, admiration, and affection that Vito Tanzi elicits from his friends, colleagues, and associates, as well as of the broad span of subjects covered by his work.
Vito Tanzi’s contribution to economics in general, and to public finance in particular, has, indeed, taken many forms. As a scholar, he has been extremely creative and productive; as a policy adviser, he has combined practicality and realism with breadth of vision and innovativeness, and his recommendations have had a lasting impact on the design of fiscal policies in many countries; and as a teacher and mentor he has always been inspiring and encouraging.
Tanzi’s work has encompassed practically all aspects of modern public finance, from the technical analysis of tax and expenditure policies and incidence to the thorough investigation of the causes for the emergence of an underground economy and the economics of corruption. His research has provided important insights which are relevant for both developing and industrial countries. His studies have systematically analysed the implications of tax policies, government expenditures, and deficit financing on savings, growth, investment, and income distribution. More recently he has devoted much attention to the interaction between fiscal policies and economic liberalization and reforms and, in particular, to the budgetary consequences of the post-socialist transition. His studies have always combined the development of a rigorous conceptual framework with the