Dynamic Scoring: A Back-of-the-Envelope Guide
N. Gregory Mankiw () and
Matthew Weinzierl ()
No 11000, NBER Working Papers from National Bureau of Economic Research, Inc
This paper uses the neoclassical growth model to examine the extent to which a tax cut pays for itself through higher economic growth. The model yields simple expressions for the steady-state feedback effect of a tax cut. The feedback is surprisingly large: for standard parameter values, half of a capital tax cut is self-financing. The paper considers various generalizations of the basic model, including elastic labor supply departures from infinite horizons, and non-neoclassical production settings. It also examines how the steady-state results are modified when one considers the transition path to the steady state.
JEL-codes: E1 H3 H6 (search for similar items in EconPapers)
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Published as Mankiw, N. Gregory and Matthew Weinzierl. "Dynamic Scoring: A Back-of-the-Envelope Guide," Journal of Public Economics, 2006, v90(8-9,Sep), 1415-1433.
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Journal Article: Dynamic scoring: A back-of-the-envelope guide (2006)
Working Paper: Dynamic Scoring: A Back-of-the-Envelope Guide (2005)
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