The marginal value of public funds: a brief guide and application to tax policy

Spencer Bastani ()
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Spencer Bastani: Institute for Evaluation of Labour Market and Education Policy (IFAU)

International Tax and Public Finance, 2025, vol. 32, issue 4, No 1, 919-956

Abstract: Abstract This paper provides a brief and accessible guide to the Marginal Value of Public Funds (MVPF) and offers some new perspectives on its application to the evaluation of tax policy. Specifically, the paper aims to: (i) bridge the gap between traditional uses of the Marginal Cost of Public Funds and the growing interest in the MVPF approach, (ii) highlight the crucial link between the MVPF and tax policy, (iii) critically discuss empirical quantification, particularly with respect to tax elasticities, and (iv) explore distributional considerations and their connection to the literature on optimal redistributive taxation.

Keywords: Benefit-cost analysis; Marginal cost of public funds; Excess burden; Distortions; Public goods; Taxation (search for similar items in EconPapers)
JEL-codes: D61 H21 H41 H53 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:kap:itaxpf:v:32:y:2025:i:4:d:10.1007_s10797-024-09860-x

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DOI: 10.1007/s10797-024-09860-x

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