Taxes, Production Technology, and Economic Growth
The article examines two different approaches to estimating the effect of the tax burden on the amount of total output and budget revenues. The first approach is based on a transformation model, in which the main role is played by a production function with variable elasticity. The second approach uses a behavioral model, with a specific version of an entropy function. Both models make it possible to determine the so-called fiscal points corresponding to the maximum production effect and the budget's maximum tax revenues. The conclusion is drawn that, of these points, only the points of the behavioral model correspond to the Laffer concept, since for points derived from the transformation model the amount of use of economic resources is exogenous, while for the points of the behavioral model this amount occurs endogenously. The results obtained are illustrated using existing data on the U.S. economy.
Year of publication: |
2012
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Authors: | Ananiashvili, Iuri ; Papava, Vladimer |
Published in: |
Problems of Economic Transition. - M.E. Sharpe, Inc., ISSN 1061-1991. - Vol. 54.2012, 12, p. 71-91
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Publisher: |
M.E. Sharpe, Inc. |
Saved in:
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