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Fiscal policy and welfare in an endogenous growth model with heterogeneous endowments

Davide Fiaschi ()

Discussion Papers from Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy

Abstract: This paper analyzes an endogenous growth model where agents have different factor endowments and government finances public expenditure by imposing two flat-tax rates, one on capital income and one on labor income. The main finding is that, in the absence of lump-sum redistributions, heterogeneity of endowments is crucial to determine the optimal fiscal policy; in particular, taxing capital income is always optimal.

Keywords: Heterogeneous agents, Efficiency, Equity; Majority voting (search for similar items in EconPapers)
JEL-codes: H21 E13 D31 D3 H23 (search for similar items in EconPapers)
Date: 2003-01-01
Note: ISSN 2039-1854
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Persistent link: https://EconPapers.repec.org/RePEc:pie:dsedps:2003/18

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