Public capital, endogenous growth, and tax concession on savings

Manash Ranjan Gupta ()
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Manash Ranjan Gupta: Indian Statistical Institute

Indian Economic Review, 2020, vol. 55, issue 2, No 2, 199-223

Abstract: Abstract An endogenous growth model is developed where, on one hand income tax revenue is utilized to finance investment on public capital, and on the other hand tax concession is given on savings. If one of the two instruments—proportional income tax rate and proportional tax-concession rate on savings—is used as the policy variable to maximize the balanced growth rate while the other is treated as a parameter, an exogenous increase in the value of the parameter raises the optimum value of the policy variable and generates a positive effect on endogenous growth rate as well as on the rate of savings in the steady-state equilibrium.

Keywords: Endogenous growth; Public capital; Steady-state equilibrium; Savings; Proportional; Lump sum; Income tax; Tax concession; Optimum (search for similar items in EconPapers)
JEL-codes: H20 O41 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s41775-020-00099-x

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