Previous studies suggest that income taxes do not affect the convergence speed in neoclassical and new growth models. Those studies use very simple tax structures. This paper shows that a relationship between taxes and convergence speed emerges if tax benefits are included in standard...

The paper compares the way economies with exogenous and endogenous innovation respond to capital income taxes. If innovation is exogenous, tax cuts increase saving. If innovation is endogenous, tax cuts increase innovation as well. Faster innovation raises capital productivity and calls forth...

Although technical knowledge generates spillover benefits, production of technical knowledge creates congestion externalities; thus, private R&D investment could be inefficient. A computable general equilibrium model is used to rank tax incentives by their effects on research effort and measure...