Taxation, Asset Bubbles, and Endogenous Growth / Besteuerung, Bubbles und Endogenes Wachstum

Wiedmer Thomas ()
Additional contact information
Wiedmer Thomas: Swiss National Bank, Bundesplatz 1, CH-3003 Bern.Tel.: ++41/+31/ 3270102, Fax: ++41/+31/3 270229

Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), 2002, vol. 222, issue 4, 500-507

Abstract: This paper examines the impact of different forms of taxation on economic growth in a model with endogenous technical progress and finitely-lived agents. We find that income taxes lower growth rates (given that income tax revenue is transferred to the old), whereas consumption taxes can, contrary to results usually reported in the literature, even spur growth rates. Therefore, tax reforms aimed to be revenue neutral and growth enhancing should envisage to lower direct taxes while increasing indirect taxes. If there is a bubble in the economy, i. e. a situation where prices of assets differ from their fundamental market values, growth rates are lower since investments are diverted away from productive investments in capital. A capital gains tax, though, limits the size of the bubble and, hence, affects growth rates positively in an economy with an asset bubble. This result is in contrast to economies without asset bubbles, where a capital gains tax usually decreases growth rates.

Keywords: Economic growth; taxation; asset bubbles; Wirtschaftswachstum; Besteuerung; Spekulationsblase (search for similar items in EconPapers)
Date: 2002
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1515/jbnst-2002-0407 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:jns:jbstat:v:222:y:2002:i:4:p:500-507

DOI: 10.1515/jbnst-2002-0407

Access Statistics for this article

Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik) is currently edited by Peter Winker

More articles in Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik) from De Gruyter
Bibliographic data for series maintained by Peter Golla ().