Growth Effects of Income and Consumption Taxes: Positive and Normative Analysis

Gian Maria Milesi-Ferretti () and Nouriel Roubini ()

Working Papers from New York University, Leonard N. Stern School of Business, Department of Economics

Abstract: The effects of income and consumption taxation are examined in the context of modesl in which the growth process is driven by the accumulation of human and physical capital. The different channels through which these taxes affect economic growth are discussed, and it is shown that in general the taxation of factor incomes (human and physical captial) is growth-reducing. The effects of consumption taxation on growth depend crucially on the elasticity of labor supply, and therefore on the specification of the leisure activity. The paper also derives implicatiions for the optiaml intertemporal choice of tax instruments.

Date: 1995-10
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Related works:
Working Paper: Growth Effects of Income and Consumption Taxes: Positive and Normative Analysis (1995)
Working Paper: Growth Effects of Income and Consumption Taxes: Positive and Normative Analysis (1995)
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Persistent link: https://EconPapers.repec.org/RePEc:ste:nystbu:95-18

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