The Sufficient Statistic Approach: Predicting the Top of the Laffer Curve

Mark Huggett and Alejandro Badel
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Alejandro Badel: St. Louis Fed

No 1396, 2015 Meeting Papers from Society for Economic Dynamics

Abstract: We provide a formula that relates the tax rate at the top of the Laffer curve to three elasticities. The formula applies to static models and to steady states of dynamic models. We also explore whether existing methods for estimating elasticities, common in the elasticity of taxable income literature, accurately estimate the theoretically-relevant elasticity. Existing methods work poorly in models with endogenous human capital accumulation but better in models with exogenous human capital.

Date: 2015
New Economics Papers: this item is included in nep-dge and nep-pbe
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: The sufficient statistic approach: Predicting the top of the Laffer curve (2017)
Working Paper: The Sufficient Statistic Approach: Predicting the Top of the Laffer Curve (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed015:1396

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