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On the Analytics of the Dunamic Laffer Curve

Jonas Agell and Mats Persson

Working Papers from Uppsala - Working Paper Series

Abstract: In this paper, we analyze government budget balance within a simple model of endogenous growth. For the AK model, simple analytical conditions for a tax cut to be self-financing can be derived. The critical variable is not the tax rate per se, but the transfer-adjusted tax rate. We discuss some conceptual issues in dynamic revenue analysis, and we explain why previous studies have arrived at seemingly contradictory results. Finally, we perform an empirical study of the transfer-adjusted tax rates of the OECD countries to see which country has the highest potential for fiscal improvements; it turns out that only a few countries have any potential for such dynamic scoring.

Keywords: FISCAL POLICY; ECONOMIC MODELS; ECONOMIC GROWTH (search for similar items in EconPapers)
JEL-codes: E62 O41 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2000
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Working Paper: On the Analytics of the Dynamic Laffer Curve (2000) Downloads
Working Paper: On Analytics of the Dynamic Laffer Curve (2000) Downloads
Working Paper: On the Analytics of the Dynamic Laffer Curve (2000) Downloads
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