Sartzetakis, Eftichios Sophocles; Tsigaris, Panagiotis … - 1997
show that second-best requires a lower than the Pigouvian tax, and a higher than "first-best" labour income tax. Starting … the additional revenues to reduce labour income tax. This revenue recycling policy has three effects: the positive … presence of uncertainty, we find that the revenue recycling effect is negative if labour income tax is below second best, due …