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Taxing or subsidizing factors' rents in a simple endogenous growth model with public capital

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Marrero, Gustavo A. y Novales Cinca, Alfonso (2003) Taxing or subsidizing factors' rents in a simple endogenous growth model with public capital. [ Documentos de trabajo del Instituto Complutense de Análisis Económico (ICAE); nº 03, 2003, ]

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URL Oficial: http://eprints.ucm.es/7702/


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Resumen

This paper tackles the fundamental issue in public finance of wether taxing or subsidizing factor rents. In a one sector endogenous growth model with private and public capital, similar to that in Barro (1990), we find that raising taxes on factors’ income as part of an optimal
fiscal policy is a more pervasive result than it seems. The interaction of technological and fiscal externalities is central for this result. For instance, high enough levels of wasteful expenditures to output ratio could make positive income taxes enhance welfare. This ratio would need to be smaller, the lower the spillover externality and/or the larger the elasticities of private and public capital in the private production function.


Tipo de documento:Documento de trabajo o Informe técnico
Palabras clave:Endogenous growth, Factors’ rents subsidy, Distorting taxes, Public capital
Materias:Ciencias Sociales > Economía > Macroeconomía
JEL:E0, E6, O4
Título de serie o colección:Documentos de trabajo del Instituto Complutense de Análisis Económico (ICAE)
Volumen:2003
Número:03
Código ID:7702
Depositado:10 Mar 2008
Última Modificación:21 Jun 2017 12:25

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