environmental policy and exports evidence from chinese cities we study environmental regulation and its role for trade in china specifically we assess the effectiveness of an environmental policy in china that introduced stricter regulations on sulfur dioxide so2 emissions in targeted cities to identify the causal effect of this policy on exports we use sectoral export data for a panel of chinese cities and exploit variations in exports between cities and sectors over time and in a second step between firm types we find a relative fall in sectoral exports in targeted cities after the implementation of the policy which is sharper the more polluting the industry further we find that the observed effect is mainly driven by privately owned firms whereas exports of state owned firms seem to be unaffected by the new policy this finding is consistent with the preferential political treatment of state owned firms in china

the political economics of redistribution inequality and tax avoidance a central result in the political economy of taxation is that the degree of redistribution is positively linked to income inequality however empirical evidence supporting such a relationship turns out to be mixed this paper shows how the different empirical reactions can be rationalized within a simple model of tax avoidance and costly tax enforcement by focusing on structure induced equilibrium in which taxpayers vote over the size of the income tax and the level of tax enforcement we show that more inequality may well reduce the extent of redistribution depending on two opposing effects the standard political effect and a negative tax base effect working through increases in the average level of tax avoidance and the share of enforcement expenditures in total tax revenue

optimal taxation in models of endogenous growth we study the problem of optimal taxation in three infinite horizon representative agent endogenous growth models the first model is a convex model in which physical and human capital are perfectly symmetric our second model incorporates elastic labor supply through a lucas style technology analysis of these two models points out the danger of assuming that government expenditures are exogenous in our third model we include government expenditures as a productive input in capital formation showing that the limiting tax rate on capital is no longer zero in numerical simulations we find similar effects on growth and welfare in all three models

intertemporal and intratemporal substitution and the speed of convergence in the neoclassical growth model abstract this paper re examines the speed of convergence in a one sector growth model under fairly general conditions with respect to both production and preferences we investigate the response of the rate of convergence to the intratemporal elasticity of substitution in production and to the intertemporal and intratemporal elasticities of substitution in consumption the speed of convergence is highly sensitive to the first two elasticities but not to the third which is reflected primarily in the agent s labor leisure choice small deviations in the elasticities from standard benchmark parameters can lead to significant variations in the rate of convergence encompassing the range of typical empirical estimates

pricing for the clean air evidence from chinese housing market abstract air pollution is widely believed to cause healthy risks and influence nations economic dimensions this paper investigates the impact of air pollution on housing prices in china s 286 prefectural level cities during 2005 2013 to address the endogeneity problem of pm2 5 concentrations in our regression we propose an instrument variable strategy based on ventilation coefficient the estimation results suggest that a 10 increase in pm2 5 concentrations causes a 2 4 reduction in local housing prices air pollution also hinders the progress of urbanization limits cities human capital formation and changes people s expectations of housing prices that we interpret as three potential mechanisms behind our main findings

environmental regulations and productivity growth the case of fossil fueled electric power generation this paper measures and analyzes the effect of sulfur dioxide emission restrictions on the rate of productivity growth in the electric power industry over the 1973 79 business cycle a firm specific measure of regulatory intensity is developed which depends on the severity of the emission standard the extent of enforcement and the unconstrained emission rate relevant to each utility the results indicate that emission regulations result in significantly higher generating costs primarily from the increased use of low sulfur fuels the average rate of productivity growth was reduced by 0 59 percentage points per year for constrained utilities

neoclassical growth the j curve for abatement and the inverted u curve for pollution abstract this paper reexamines the neoclassical environmental growth model of forster to gain insights into the dynamic relationships among pollution abatement effort and economic development whereas the model has heretofore been used to examine steady state levels of capital consumption and environmental quality it also provides a theoretical basis for recent empirical research on j curves for abatement effort and inverted u curves for pollution

growth effects of flat rate taxes recent estimates of the potential growth effects of tax reform vary wildly ranging from zero to eight percentage points using an endogenous growth model we assess which model features and parameter values are important for determining the quantitative impact of tax reform we find that the critical parameters are factor shares depreciation rates the elasticity of intertemporal substitution and the elasticity of labor supply the elasticities of substitution in production on the other hand are relatively unimportant the quantitative estimates in several recent papers are compared with each other and with some of the evidence from u s experience we find that robert lucas s conclusion that tax reform would have little or no effect on the u s growth rate is theoretically robust and consistent with the evidence

does hazardous waste matter evidence from the housing market and the superfund program this paper uses the housing market to develop estimates of the local welfare impacts of superfund sponsored cleanups of hazardous waste sites we show that if consumers value the cleanups then the hedonic model predicts that they will lead to increases in local housing prices and new home construction as well as the migration of individuals that place a high value on environmental quality to the areas near the improved sites we compare housing market outcomes in the areas surrounding the first 400 hazardous waste sites chosen for superfund cleanups to the areas surrounding the 290 sites that narrowly missed qualifying for these cleanups we find that superfund cleanups are associated with economically small and statistically insignificant changes in residential property values property rental rates housing supply total population and types of individuals living near the sites these findings are robust to a series of specification checks including the application of a regression discontinuity design based on knowledge of the selection rule overall the preferred estimates suggest that the local benefits of superfund cleanups are small and appear to be substantially lower than the 43 million mean cost of superfund cleanups

public budgetary rules and gdp growth an empirical study on oecd and twelve european countries we study the long term effects of budgetary rules on gdp growth rate and analyse the determinants of the short term gdp growth dynamics for both a sample of 19 oecd and a subsample of 12 european countries we show that in the long run improvements in the cyclically adjusted budget balance as well as increases in the tax burden have negative effects on gdp growth the highest effect of fiscal policy on gdp growth would be obtained if the structural deficits were used to increase the market size by reducing the tax burden in line with barro 1990 a deficit financed reduction of tax burden has a stronger effect for european than for oecd countries because in europe the government size with respect to market size is too large therefore if gdp growth is a dominant policy objective in europe specific actions should redress the 2012 treaty toward a reduction of the tax burden

infrastructure investment a review essay economists try not to be faddists but they often cannot help themselves while work on a topic should mirror the prospective importance of the topic that situation seems to occur with disappointing frequency instead the usual pattern is that some reasonably important topic will be totally ignored for the longest time then recognized and then the subject of a flurry of work all out of proportion to its likely long run importance nowhere has this speculative bubble of economic research been more clearly illustrated than with infrastructure investment macroeconomists havelong felt that the stock of public capital is an important factor input in the production of total output macroeconomists have known that u s productivity growth slowed dramatically in about 1973 and macroeconomists should have known that united states investment in public capital has been down since the late 1960s yet analysis of the u s productivity slowdown completely ignored infrastructure investment for the first fifteen years of this slowdown concentrating instead on energy prices social regulation the composition of the work force research and development different rates of obsolescence of the private capital stock and any number of other matters the public capital stock was hardly ever even mentioned as a potential factor in the productivity slowdown aschauer changed all that he wrote a series of papers 1989a 1989b 1989c that put these two movements together econometrically infrastructure investment turned down and aggregate productivity turned down slightly later both in the united states and in some other developed countries his work hit the magic button those who had worried about the productivity puzzle for fifteen years welcomed a new suspect those who were worried about low rates of u s national saving welcomed a new way to make their argument even more forcefully than with official figures on saving and investment which do not count infrastructure investment as investment political liberals and liberal politicians saw a way to rescue government spending and projects from the assaults of reaganism and even a way to avoid oth

immigration and housing rents in american cities is there a local economic impact of immigration immigration pushes up rents and housing values in us destination cities the positive association of rent growth and immigrant inflows is pervasive in time series for all metropolitan areas i use instrumental variables based on a shift share of national levels of immigration into metropolitan areas an immigration inflow equal to 1 of a city s population is associated with increases in average rents and housing values of about 1 the results suggest an economic impact that is an order of magnitude bigger than that found in labor markets

scale congestion and growth this paper explores the relationship between aggregate and relative congestion returns to scale and economic growth aggregate congestion reduces the effective productivity of capital relative congestion reduces the effective productivity of labour both forms of congestion adversely affect the equilibrium growth rate although their relative effects depend upon aggre gate returns to scale the two forms of congestion have contrasting effects on the transitional dynamics relative congestion retards the rate of adjustment aggregate congestion accelerates it the externalities generated by congestion and non optimal expenditure can be fully cor rected both during the transition and in steady state by a time invariant income tax the role of public expenditure as an instrument of economic growth has been a major policy issue as governments throughout the world design stimulus packages as in japan and face difficult choices to meet the emu criteria in europe empirical research investigating the impact of public investment on the productivity of private capital and output was stimulated by aschauer 1989a b who found the effects to be strongly positive the nature of public investment is however diverse in general public goods vary extensively in terms of the nature of their services spanning the range between the polar cases of pure private and pure public goods but the treatment of public expenditures in formal growth models is limited barro 1990 and futagami et al 1993 treat government expenditure as a pure pub lic good and in so doing they fail to take account of the congestion typically associated with public goods however as barro and sala i martin 1992 have argued almost all public services are characterized by some degree of congestion so that the pure public good should be viewed as only a bench mark these considerations suggest that congestion is an important consider ation in assessing the effect of public expenditures on economic growth attempts to analyse the effects of congestion on economic growth have been limited in various dimensions drawing on the public goods literature edwards 1990 proposes a number of specifications of congestion two notions particularly relevant in a growth context are relative congestion and aggregate absolute congestion the former specifies the level of services derived by an individual from the provision of a public good in terms of the usage of his individual capital stock relative to the aggregate capital stock aggregate congestion sometimes called crowding indicates how aggregate usage of the service alone influences the services received by an individual 2 existing applications of congestion to growth theory introduce it into ak models see barro and sala i martin 1992 1995 glomm and ravikumar 1994 1997 and turnovsky 1996 1997 however the ak model features two limitations that restrict its flexibility to examine the relationship between congestion and growth first as solow 1994 pointed out sustained ongoing

how misleading is linearization evaluating the dynamics of the neoclassical growth model this paper investigates the reliability of employing linearization to evaluate the dynamic adjustments to changes in productive government spending in a ramsey growth model if government expenditure is introduced as a flow and the dynamic adjustment is fast linearization may yield a reasonably good approximation to the true dynamics even for fairly large policy shocks if government expenditure assumes the form of a stock leading to more sluggish adjustment linearization may yield misleading predictions these errors occur at the beginning of the transition and weigh heavily in welfare calculations the implications for temporary shocks and the speed of convergence are also considered

fiscal policy elastic labor supply and endogenous growth abstract endogenizing labor supply leads to fundamental changes in the equilibrium structure of the ak growth model the balanced growth equilibrium can be described in terms of two tradeoff loci relating the equilibrium growth rate to the fraction of time devoted to leisure the implications of endogenous labor supply for fiscal policy are analyzed three issues are addressed first the effects of various distortionary tax changes and government expenditure changes on the equilibrium growth leisure employment tradeoff are analyzed second optimal fiscal policy is characterized finally the formal analysis is supplemented by numerical results focusing particularly on the quantitative welfare implications

public investment in infrastructure in a simple growth model abstract in this paper we examine the implications for capital accumulation when infrastructure enters as an external input into private production functions in our model infrastructure is nonexclusive but may exhibit varying degrees of nonrivalry revenues from uniform taxes on capital and labor income are used to finance public investment in infrastructure we show that the optimal tax rate is independent of the degree of nonrivalry when production exhibits constant returns to augmentable factors the equilibrium displays constant growth for most parameters the growth rate depends on the population size under decreasing returns the optimal trajectory exhibits monotonic convergence to a steady state level

optimal fiscal and monetary policy in an economy without capital abstract this paper is concerned with the structure and time consistency of optimal fiscal and monetary policy in an economy without capital in a dynamic context optimal taxation means distributing tax distortions over time in a welfare maximizing way for a barter economy our main finding is that with debt commitments of sufficiently rich maturity structure an optimal policy if one exists is time consistent in a monetary economy the idea of optimal taxation must be broadened to include an inflation tax and we find that time consistency does not carry over an optimal inflation tax requires commitment by rules in a sense that has no counterpart in the dynamic theory of ordinary excise taxes the reason time consistency fails in a monetary economy is that nominal assets should from a welfare maximizing point of view always be taxed away via an immediate inflation in a kind of capital levy this emerges as a new possibility when money is introduced into an economy without capital

supply side economics and endogenous growth abstract in a simple convex model of endogenous growth the expansionary effects of a deficit financed tax cut are often strong enough to allow the government debt to be paid off in the long run without the need for subsequent tax increases a permanent and substantial reduction in marginal rates of income taxation can provide for both vigorous real economic growth and long run government budget balance

budget balance welfare and the growth rate dynamic scoring of the long run government budget this paper determines conditions under which a reduction in the role of government either through a tax cut alone or together with accompanying expenditure cuts will improve long run government fiscal balance for a ceteris paribus cut in the income tax rate to improve long run government balance the intertemporal elasticity of substitution must exceed unity a tax cut balanced by an expenditure cut is likely to improve the long run balance even if it does not improve the short run balance the relationship between improving the long run fiscal balance and economic welfare is also analyzed

the cost of regulation osha epa and the productivity slowdown the slowdown in productivity growth in the u s economy during the 1970 s has been a matter of great concern to policymakers associated as it is with inflation unemployment and declining real wage growth this paper examines the impact on productivity growth of government regulation specifically worker health and safety regulation by the occupational safety and health administration osha and environmental regulation by the environmental protection agency epa looking at data for 450 manufacturing industries between 1958 and 1978 the study finds a large negative relationship between such regulation and productivity growth using these results about 30 percent of the decline in productivity growth in manufacturing during the 1970 s may be attributed to such regulation several previous studies have looked at the contribution of regulation to the productivity slowdown many of these have inferred that the contribution must be small on the basis of the relatively small amount spent on complying with such regulations edward denison 1979 estimates that only about 16 percent of the productivity slowdown in the 1972 75 period was due to regulation 35 percentage points out of a slowdown of 2 17 percentage points paul portney 1981 notes that little of gnp is spent on pollution control under 2 percent concluding that therefore pollution regulations could have little effect on productivity growth norsworthy et al 1979 also find a small impact of pollution abatement capital expenditures on productivity growth studies based on econometric estimation of the regulation productivity relationship have found a wide range of results gregory christainsen and robert haveman 1981 find regulation reduced labor productivity growth by 27 percentage points using time series data and measures of total federal regulation robert crandall 1981 finds a strong relationship between pollution abatement capital and productivity growth but this relationship disappears when a measure of energy intensity is included robin siegel 1979 observes a significant contribution 5 percentage points from pollution control expenditures to the productivity slowdown for 1965 73 but not for later years finally frank gollop and mark roberts 1983 examine data for a set of electric utilities and find that regulation of emissions had a large impact on total factor productivity growth lowering it for regulated firms by 59 percentage points many other factors might help to explain the productivity slowdown including the rise in energy prices the long and severe recession and declines in research and development expenditures there have been a variety of studies examining the contributions of each factor to the slowdown they generally conclude that many factors contributed to the slowdown but that a sizable fraction of the slowdown remains unexplained by the estimated contributions of all the factors considered

optimal taxes and the structure of preferences if optimal tax theory is to be the basis for calculating tax rates a close understanding is required of the relationship between the structure of preferences and the configuration of optimal tax rates otherwise hypotheses chosen by the econometrician for practical convenience may completely determine the results independently of measurement this paper explores the relationship between various types of separability particularly weak and implicit separability and optimal tax rates in the various models discussed in the literature the use of distance functions and the antonelli matrix provides a significant unification of previously disparate results in the final analysis optimal tax theory should be the basis for actual calculation of tax rates although recently there have been great advances in theoretical results and in our understanding of their meaning we are still some way from a working knowledge of whether uniform commodity taxes are in practice optimal or if not which commodities should be discriminated against present theoretical formulae do not yield clear cut results except in special cases and it has recently become clear that optimal rates depend crucially on the detailed structure of consumer preferences for example atkinson and stiglitz 3 show that with an optimal nonlinear income tax discriminatory commodity taxes are only necessary to the extent that individual commodities are not weakly separable from leisure more recently deaton 6 has shown that a similar result holds for what is perhaps the most interesting of the standard models that where there are many consumers and only a linear income tax and proportional commodity taxes are allowed in this case separability between goods and leisure together with linear engel curves for goods removes the need for differential commodity taxation in consequence nothing can be learned about commodity taxes from consumer demand studies in which commodity demands are explained conditionally on total expenditure and commodity prices and which assume linear engel curves all such studies require separability from leisure as a maintained hypothesis and so are consistent with uniform commodity taxation these results suggest that the prospects for meaningful empirical calculations of tax rates are bleak econometricians estimating commodity demand and labor supply equations make generous use of separability assumptions to enable estimation at all in consequence it is likely that empirically calculated tax rates based on econometric estimates of parameters will be determined in structure not by the measurements actually made but by arbitrary untested and even unconscious hypotheses chosen by the econometrician for practical convenience to remedy this situation and as a prelude to fruitful empirical work it is necessary to have a more explicit understanding of how preference structure affects optimal tax rates such is the object of this paper three different

is public expenditure productive abstract this paper considers the relationship between aggregate productivity and stock and flow government spending variables the empirical results indicate that i the nonmilitary public capital stock is dramatically more important in determining productivity than is either the flow of nonmilitary or military spending ii military capital bears little relation to productivity and iii a core infrastructure of streets highways airports mass transit sewers water systems etc has most explanatory power for productivity the paper also suggests an important role for the net public capital stock in the productivity slowdown of the last fifteen years

capital utilization economic growth and convergence abstract optimal decisions by economic agents regarding the utilization of capital lead to empirically plausible speeds of convergence in one sector models of economic growth the relationship between depreciation and capital utilization plays a crucial role in slowing down convergence to the steady state cross country differences in the extent to which the capital utilization decision is internalized along the transition path may lead to differences in convergence rates even for countries with similar initial and terminal conditions finally by assuming a constant depreciation rate and full capital utilization standard growth models may be overstating the magnitude of the steady state equilibrium

how fast do economics converge the conventional approach to estimating how fast economics converge examines the cross economy relationship between the growth rate of per capita output over some time period and its initial level this approach produces consistent estimates only under highly restrictive assumptions which are violated by the data the paper develops an alternative approach that produces consistent estimates under weak assumptions this approach yields estimates substantially larger than those reported in the literature and also sufficiently large to be broadly consistent with the predictions of neoclassical growth theory

the optimal public expenditure financing policy does the level of economic development matter i introduction does the growth effect of public expenditures depend on the way these expenditures are financed over the years a substantial volume of theoretical and empirical research has been directed toward identifying the elements of public expenditure at its aggregated and disaggregated level that bear significant association with economic growth in contrast only a handful of studies have paid particular attention to examine the extent to which the growth effect of public expenditures depends on the method of financing such expenditures e g de gregorio 1993 miller and russek 1997 palivos and yip 1995 the consensus appears to be that the two primary modes of financing income taxation and seigniorage are distortionary opinions however are divided as to their relative merits for example according to palivos and yip 1995 income tax financing is more detrimental to growth than seigniorage financing at the same time de gregorio 1993 suggests that as long as the rate of return on indexed bonds is substantially responsive to changes in the rate of inflation seigniorage financing of public expenditure is more growth reducing pecorino 1997 on the other hand prescribes a mix of both modes of financing despite these differences the above mentioned studies share a common characteristic the optimal mode of financing public expenditure in these studies is viewed as being not contingent on the stages of economic development accordingly there remains little understanding of the process by which public expenditure financing policies shape the prospect of economic growth for developing vis a vis developed countries the primary objective of this paper is to bridge this gap in the existing literature it is a long standing belief among development experts that outcomes of public expenditures and revenue policies are conditional on the state of an economy recent evidence supports such belief for example miller and russek 1997 suggest that for developing countries a deficit financed increase in public expenditure retards economic growth and a tax financed increase leads to higher growth for developed countries a deficit financed increase in government expenditure does not affect economic growth and a tax financed increase leads to a lower growth in light of these findings and in light of the theoretical controversy about the relative merits of seigniorage versus tax finance it is meaningful to ask the following question does the relative merit of seigniorage vis a vis tax financing of public expenditure depend on the stage of economic development this paper seeks an answer to this question using both theoretical and empirical analyses the theoretical framework developed in this paper shares many of the characteristics of the models proposed by espinosa vega and yip 1999 2000 and schreft and smith 1997 in particular we consider a two period overlapping generations model where agents are subjected to stochastic relocations shocks which act like shocks to their portfolio preferences these shocks have the same consequence as liquidity preference shocks as in diamond and dybvig 1983 and create a role for financial intermediaries who take deposits and make a portfolio decision on behalf of the households in addition there is a government that relies on two alternative sources of revenue seigniorage and tax revenue to finance its exogenously given expenditure sequence the results that we derive are shaped by the portfolio decision of the financial intermediaries in particular at each point in time financial intermediaries are required to allocate their portfolios between a nonproductive liquid asset money and a productive illiquid asset the illiquid asset takes the form of financing risky investment projects which in turn generate productive capital stock for the economy the financial intermediaries optimal portfolio allocation rules depend on the relative rate of return of the two available assets

fiscal policy in general equilibrium this paper studies four classic fiscal policy experiments within a quantitatively restricted neoclassical model the authors main findings are as follows 1 permanent changes in government purchases can lead to short run and long run output multipliers that exceed one 2 permanent changes in government purchases induce larger effects than temporary changes 3 the financing decision is quantitatively more important than the resource cost of changes in government purchases and 4 public investment has dramatic effects on private output and investment these findings stem from important dynamic interactions of capital and labor absent in earlier equilibrium analyses of fiscal policy copyright 1993 by american economic association

the transitional dynamics of fiscal policy long run capital accumulation and growth this paper analyzes the effects of fiscal policies in a non scale growing economy with public and private capital the equilibrium dynamics are characterized and we contrast the dynamic effects of government expenditure on investment and expenditure on consumption under four alternative modes of tax financing most of our attention focuses on the numerical simulations of a calibrated economy the results emphasize the lengthy transition periods which implies that policies have sizeable level effects leading to substantial welfare effects even though long run growth rates are unaffected the paper highlights the intertemporal dimensions of fiscal policy and the tradeoffs these involve for economic performance especially growth and welfare

does regret matter in public choices for air quality improvement policies a comparison of regret based and utility based discrete choice modelling abstract the choice experiment used to elicit public preferences and willingness to pay is increasingly popular in the studies of air quality improvement policies however the traditional random utility maximization rum models underlying the choice experiment approach ignores the important influence of anticipated regret on individual choice behaviour to explore the importance of regret in public preferences for air quality improvement policies this study introduces random regret minimization rrm models in the analysing of public choices and further compares the performance of utility based and regret based discrete choice modelling based on the multinomial logit and hybrid latent class models the results suggest that the rrm models outperform the rum model regarding goodness of fit and prediction indicating that the rrm models can be used as an alternative and supplement to traditional rum models particularly 55 9 of the choices from respondents are mainly driven by regret our results also reveal that respondents driven by regret based choice paradigm have a stronger preference for increased clean air days reduced haze days and lower mortality whereas utility based respondents prefer to shorten the years of policy delay these findings are useful for the design of socially optimal policies on the sustainable management of air pollution and providing theoretical reference for the development of environment related policies

optimal taxation of capital income in general equilibrium with infinite lives this paper analyzes the optimal tax on capital income in general equilibrium models of the second best agents have infinite lives and utility functions which are extensions from the koopmans form the population is heterogeneous the important property of the models is the equality between the social and the private discount rates in the long run i find that the optimal tax rate is zero in the long run for a special case of additively separable utility functions i then determine the tax rates along the dynamic path and conditions that are sufficient for the local stability of the steady state

optimal tax debt and expenditure policies in a growing economy abstract this paper employs an endogenous growth model to analyze the role of a consumption tax in enhancing growth and welfare provided government expenditure impacts directly on the decisions of private agents two fiscal instruments are necessary to replicate the first best optimum the tradeoff between consumption and income taxes to achieve this outcome is discussed and shown to depend upon the degree of congestion associated with the public good and the level of government expenditure relative to its social optimum in general the analysis suggests a potentially important role for a consumption tax as part of an overall optimal fiscal package

a general two sector model of endogenous growth with human and physical capital balanced growth and transitional dynamics abstract we examine a two sector endogenous growth model with general constant return to scale production technologies governing the evolution of human and physical capital we prove the existence uniqueness and saddle path stability of the balanced growth equilibrium a dual approach drawing on techniques from international trade theory is used to provide complete characterization of the transitional dynamics of consumption goods and education outputs human and physical capital inputs and the relative price of human capital investment we investigate the long run effects of changes in time preference and factor taxation and show the emergence of instability or indeterminacy when factor taxes are too distortionary journal of economic literatureclassification number d90

the growth effects of tax rates in the oecd this paper explores the merits of macro and micro based tax rate measures within an open economy fiscal policy and growth model using annual data for 15 oecd countries we find statistically small non robust long run growth effects of macro based average tax rates on capital income and consumption but some evidence for average labor income tax effects changes in micro marginal income tax rates at both the personal and corporate levels yield statistically robust gdp responses of modest size both domestic and foreign corporate taxes appear relevant in general tax effects on gdp operate largely via factor productivity rather than factor accumulation

distortionary taxes and public investment when government promises are not enforceable abstract we characterize the optimal financing of productive public capital and compute the welfare loss from being unable to commit to the ramsey policy because this calculation ultimately relies on numerical approximations we contrast alternative approaches while perturbation and linear quadratic methods deliver accurate steady states the latter can yield misleading policy implications during transitions we find that moving from a regime with commitment to one with discretion implies only a small welfare loss although markov perfect consumption falls noticeably short of its ramsey counterpart in steady state consumption under discretion is higher in the short run which largely offsets this long run loss

dynamic analysis of an endogenous growth model with public capital this paper develops an endogenous growth model with productive public capital along with private capital in a spirit similar to that of r j barro 1990 since the authors model includes two stock variables it has transitional dynamics unlike most of the previous studies on endogenous growth including barro s where concerns are restricted to the steady state analysis first they show that the transitional path is unique and stable second the character of the transitional path is explored third the authors show that the optimal tax rate is smaller than the rate that maximizes the national growth rate with a log linear utility function copyright 1993 by the editors of the scandinavian journal of economics