Feldstein (1997) reviews his and others' contributions in the distortionary costs of taxation, arriving at a remarkable estimate that the cost per incremental dollar of government spending is a very high $2.65. Kaplow (1996) argues that it is optimal to supply a public good whenever the...

Feldstein (1997) reviews his and others' contributions in the distortionary costs of taxation, arriving at a remarkable estimate that the cost per incremental dollar of government spending is a very high $2.65. Kaplow (1996) argues that it is optimal to supply a public good whenever the...

When deciding on the social desirability of public investment, the cost of a project is sometimes adjusted by a factor known as the Marginal Cost of Public Funds (MCPF) which captures the cost of raising public funds through distortionary taxation. However, there is no scholarly consensus on...

When deciding on the social desirability of public investment, the cost of a project is sometimes adjusted by a factor known as the Marginal Cost of Public Funds (MCP F ), which captures the cost of raising public funds through distortionary taxation. However, there is no scholarly consensus on...

In this paper we revisit the literature on the economic consequences from inefficiency in public services provision. Following Dupuit (1844) and Pigou (1947) we argue that it is important to take the financing side explicitly into account. The fact that public expenditure financing must rely on...