TESTING FOR TAX SMOOTHING IN A GENERAL EQUILIBRIUM MODEL OF GROWTH

Jim Malley (), Apostolis Philippopoulos () and George Economides ()
Authors registered in the RePEc Author Service: Nicholas S. Economides ()

Working Papers from Department of Economics, University of Glasgow

Abstract: This paper constructs and formally tests a general equilibrium model of long-term growth and endogenous fiscal policy. In this model policymakers find it optimal to keep the income tax rate constant over time. Tax revenues finance public consumption and public production services, with the latter generating long-term growth. Surprisingly, despite its popularity amongst theorists, there have thus far been no formal econometric tests of this Barro-type general equilibrium model. We find that data from 22 OECD economies uniformly reject this model over the period 1960- 1996.

JEL-codes: H3 H21 (search for similar items in EconPapers)
Date: 1999-11
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Journal Article: Testing for tax smoothing in a general equilibrium model of growth (2002)
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Persistent link: http://EconPapers.repec.org/RePEc:gla:glaewp:1999_22

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