Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5099577 | Journal of Economic Dynamics and Control | 2007 | 24 Pages |
Abstract
This paper studies a class of AK-type growth models with factor income taxes, public capital stock and labor-leisure trade offs. While a higher capital tax rate reduces economic growth in the short run, the long-term growth effect is ambiguous and remains ambiguous even if the level of tax rate is larger than the degree of government externality. A higher labor income tax rate has ambiguous growth effects both in the short and long runs. However, if the intertemporal elasticity of substitution for labor supply is sufficiently small, a higher labor tax rate always lowers economic growth in the long run, despite the existence of productive government taxation.
Related Topics
Physical Sciences and Engineering
Mathematics
Control and Optimization
Authors
Been-Lon Chen,