How Far Are We From the Slippery Slope? The Laffer Curve Revisited

Harald Uhlig () and Mathias Trabandt

No 5657, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: The goal of this paper is to examine the shape of the Laffer curve quantitatively in a simple neoclassical growth model calibrated to the US as well as to the EU-15 economy. We show that the US and the EU-15 area are located on the left side of their labor and capital tax Laffer curves, but the EU-15 economy being much closer to the slippery slopes than the US. Our results indicate that since 1975 the EU-15 area has moved considerably closer to the peaks of their Laffer curves. We find that the slope of the Laffer curve in the EU-15 economy is much flatter than in the US which documents a much higher degree of distortions in the EU-15 area. A dynamic scoring analysis shows that more than one half of a labor tax cut and more than four fifth of a capital tax cut are self-financing in the EU-15 economy.

Keywords: Laffer curve; Us and eu-15 economy (search for similar items in EconPapers)
JEL-codes: E0 E60 H0 (search for similar items in EconPapers)
Date: 2006-05
New Economics Papers: this item is included in nep-dge, nep-mac and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (53)

Downloads: (external link)
https://cepr.org/publications/DP5657 (application/pdf)

Related works:
Working Paper: How far are we from the slippery slope? The Laffer curve revisited (2010)
Working Paper: How Far Are We From The Slippery Slope? The Laffer Curve Revisited (2009)
Working Paper: How far are we from the slippery slope? The Laffer curve revisited (2006)
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:cpr:ceprdp:5657

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP5657

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().