Tax Rates, Deficits, and Intertemporal Efficiency

David Aschauer

Public Finance Review, 1988, vol. 16, issue 3, 374-384

Abstract: This article contains the derivation of a compact elasticity formula for the efficient taxation of labor income in an intertemporal setting. The question of whether or not efficient public financial policy will involve constant tax rates over time is addressed by reference to this formula under various specifications of the economic environment. A specific set of assumptions sufficient to generate tax constancy consists of (1) preferences of the isoelastic marginal utility class and (2) public debt indexation to aggregate consumption levels. In this instance, the government would find it optimal to run deficits—holding tax rates constant—when either public expenditure levels are high or when tax base levels are low.

Date: 1988
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/109114218801600308 (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:sae:pubfin:v:16:y:1988:i:3:p:374-384

DOI: 10.1177/109114218801600308

Access Statistics for this article

More articles in Public Finance Review
Bibliographic data for series maintained by SAGE Publications ().