On the Analytics of the Dynamic Laffer Curve

Jonas Agell and Mats Persson

No 2000:5, Working Paper Series from Uppsala University, Department of Economics

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: Laffer effects; intertemporal models; dynamic scoring; growth models (search for similar items in EconPapers)
JEL-codes: E62 O41 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2000-05-02
New Economics Papers: this item is included in nep-dev, nep-dge and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published in Journal of Monetary Economics, 2001, pages 397-414.

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Related works:
Journal Article: On the analytics of the dynamic Laffer curve (2001)
Working Paper: On the Analytics of the Dynamic Laffer Curve (2000)
Working Paper: On the Analytics of the Dunamic Laffer Curve (2000)
Working Paper: On Analytics of the Dynamic Laffer Curve (2000)
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