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On the Analytics of the Dynamic Laffer Curve
Department of Economics, Uppsala University.
Stockholm University, Faculty of Social Sciences, Institute for International Economic Studies.
2000 (English)Report (Other academic)
Abstract [en]

In this paper, we analyze government budget balance within a simple model of endogenous growth. For the AK model, simple analytical conditions for a tax cut to be self-financing can be derived. The critical variable is not the tax rate per se, but the "transfer-adjusted tax rate". We discuss some conceptual issues in dynamic revenue analysis, and we explain why previous studies have arrived at seemingly contradictory results. Finally, we perform an empirical study of the transfer-adjusted tax rates of the OECD countries to see which country has the highest potential for fiscal improvements; it turns out that only a few countries have any potential for such "dynamic scoring".

Place, publisher, year, edition, pages
Stockholm: IIES , 2000. , 33 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 682
Keyword [en]
Laffer effects, intertemporal models, dynamic scoring, growth models
National Category
URN: urn:nbn:se:su:diva-41150OAI: diva2:328523
Available from: 2010-07-05 Created: 2010-07-05 Last updated: 2010-08-16Bibliographically approved

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