Dynamic Scoring: A Back-of-the-Envelope Guide

N. Gregory Mankiw () and Matthew C Weinzierl ()

No 11000, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper uses the neoclassical growth model to examine the extent to which a tax cut pays for itself through higher economic growth. The model yields simple expressions for the steady-state feedback effect of a tax cut. The feedback is surprisingly large: for standard parameter values, half of a capital tax cut is self-financing. The paper considers various generalizations of the basic model, including elastic labor supply departures from infinite horizons, and non-neoclassical production settings. It also examines how the steady-state results are modified when one considers the transition path to the steady state.

JEL-codes: E1 H3 H6 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-dge and nep-mac
Date: 2004-12
Note: EFG
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Related works:
Working Paper: Dynamic Scoring: A Back-of-the-Envelope Guide (2005)
Journal Article: Dynamic scoring: A back-of-the-envelope guide (2006)
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