Cuñat, Alejandro; Deák, Szabolcs; Maffezzoli, Marco - IGIER (Innocenzo Gasparini Institute for Economic … - 2008
A reduction in income tax rates generates substantial dynamic responses within the framework of the standard neoclassical growth model. The short-run revenue loss after an income tax cut is partly -- or, depending on parameter values, even completely -- offset by growth in the long-run, due to...