This paper examines the economic effects of tax reform in an endogenous growth model that allows for two types of useful public expenditures; one type contributes to human capital formation while the other provides direct utility to households. We show that the optimal fiscal policy calls for...

This paper develops a quantitative general equilibrium model to assess the growth effects of adopting a flat tax plan similar to the one proposed by Hall and Rabushka (1995). Using parameters calibrated to match the level and slope of the U.S. tax schedule and other features of the U.S. economy,...

This paper evaluates the efficiency implications of various fundamental tax reforms in an infinite-horizon endogenous growth model with public-sector investment in human capital. A fully optimal reform requires the government to adjust its expenditures on education, training, or R&D to take into...