Publication: Growth and welfare : distorting or non-distorting taxes
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2001
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Instituto Complutense de Análisis Económico. Universidad Complutense de Madrid
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Abstract
Se demuestra que recaudar impuestos sobre la renta puede resultar una mejor alternativa que financiar el gasto público con impuestos de suma fija, en un modelo de crecimiento endógeno de un sector con gasto público productivo e improductivo y bajo ciertas restricciones fiscales realistas.
Abstract
In an infinitely-lived framework, taxing capital income may be growth and welfare
enhancing when it allows for correcting distorting externalities in the competitive
equilibrium allocation. This is the case when public capital is subject to congestion
by private capital or total income [Fisher and Turnovsky (1998)] or when government
expenditure exerts an external effect on physical capital [Corsetti and Roubini
(1996)]. However, none of these features appear in simple one-sector endogenous
growth models with public capital. Alternatively, we consider certain realistic fiscal
policy constraints in a simple one-sector growth model with productive and unproductive
public expenditures, to show that raising revenues through factor income
taxes may be preferred to using lump-sum taxes.
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JEL Classification: E0, E6, O4
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