Growth Effects of Income and Consumption Taxes: Positive and Normative Analysis

Gian Maria Milesi-Ferretti () and Nouriel Roubini

No 1995/062, IMF Working Papers from International Monetary Fund

Abstract: The effects of income and consumption taxation are examined in the context of models in which the growth process is driven by the accumulation of human and physical capital. The different channels through which these taxes affect economic growth are discussed, and it is shown that in general the taxation of factor incomes (human and physical capital) is growth-reducing. The effects of consumption taxation on growth depend crucially on the elasticity of labor supply, and therefore on the specification of the leisure activity. The paper also derives some implications for the optimal intertemporal choice of tax instruments.

Keywords: WP; income tax; physical capital; growth-maximizing tax structure; income taxation; accumulation technology; long-run growth; uniform consumption tax; tax measure; tax variable; analysis consumption tax; distortionary tax; optimal taxation plan; taxation analysis; physical capital taxation; Human capital; Consumption taxes; Income tax systems; Capital income tax; Income and capital gains taxes (search for similar items in EconPapers)
Pages: 38
Date: 1995-07-01
References: Add references at CitEc
Citations: View citations in EconPapers (19)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=1349 (application/pdf)

Related works:
Working Paper: Growth Effects of Income and Consumption Taxes: Positive and Normative Analysis (1995)
Working Paper: Growth Effects of Income and Consumption Taxes: Positive and Normative Analysis (1995)
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:imf:imfwpa:1995/062

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().