OPTIMAL PROVISION OF PUBLIC INPUTS IN A SECOND BEST SCENARIO (*)

Diego Martínez and Antonio Jesus Sanchez Fuentes ()

Working Papers from Instituto de Estudios Fiscales

Abstract: . This paper studies the optimal provision of public inputs under two different tax settings: with lump-sum taxes and with taxes on labour. After obtaining the optimality rules for the provision of public inputs, a numerical simulation is carried out to compute the level of public spending in each scenario. We find that a second- best rule has to be followed when lump-sum taxes are not available, even though the labour taxes are set optimally. Another result we obtain is that the level of public input provided under the second best scenario is higher than that corresponding to the first best outcome. The effect of changes to some parameters on the level of public input is also studied.

Keywords: public input; optimal taxation. (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.ief.es/documentos/recursos/publicaciones/papeles_trabajo/2005_17.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to www.ief.es:443 (Bad file descriptor) (http://www.ief.es/documentos/recursos/publicaciones/papeles_trabajo/2005_17.pdf [302 Moved Temporarily]--> https://www.ief.es/documentos/recursos/publicaciones/papeles_trabajo/2005_17.pdf)

Related works:
Journal Article: The optimal provision of public inputs in a second best scenario (2004)
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:hpe:wpaper:y:2005:i:17

Access Statistics for this paper

More papers in Working Papers from Instituto de Estudios Fiscales Contact information at EDIRC.
Bibliographic data for series maintained by Miguel Gómez de Antonio ().