We investigate optimal tax policy in a Romer-style endogenous growth model. We derive formulas for the optimal tax rates on capital, labor, and innovation on a balanced growth path. We compute the balanced growth path and the transition to it with optimal policy for a range of parameter values....

Industrial innovation churns out increasingly unnatural products and technologies amid scientific uncertainty about their harmful effects. We argue that a quick regulatory response to the discovery that certain innovations are harmful is an important indicator for evaluating the performance of...