22/03/2006 | Dynamic Scoring: Alternative Financing Schemes - PDF
Eric M. Leeper, Shu-Chun Susan Yang
Neoclassical growth models predict positive growth effects over the entire transition path following a reduction in capital or labor tax rates when lump-sum taxes (or transfers) are used to balance the government budget. This paper considers the consequences of bond-financed tax reductions that bring forth adjustments in expected future government consumption, capital tax rates, or labor tax rates. Through the resulting intertemporal distortions, current tax cuts can lower growth. The paper shows that the stronger the response of distorting fiscal policies to debt, the more favorable the growth effects of a tax cut.
NBER (Estados Unidos)
Otras Notas del Autor
ver + notas
|