Leeper, Eric M.; Yang, Shu-Chun Susan - Center for Applied Economics and Policy Research … - 2006
Neoclassical growth models predict that reductions in capital or labor tax rates are expansionary when lump … bring forth a range of possible offsetting policies, including future government consumption, capital tax rates, or labor … tax rates. Through the resulting intertemporal distortions, current tax cuts can be contractionary. The paper also finds …