The trend of increasing inequality in the distribution of income and wealth in most developed countries has led to calls for corrective tax increases for the rich and wealthy. Such calls are often confronted with the claim that higher taxes on top personal incomes, corporate income and wealth...

We construct a tractable endogenous growth model with production externalities in which the public capital stock augments investment specific technological change. We characterize the first best fiscal policy and show that there exist several labor and capital tax-subsidy combinations that...

This paper contains an investigation of the effects of different means of financing government spending on economic growth, inflation, and welfare. In this setting, two different types of government spending are considered: productive expenditures which provide services to the private sector in...

In this paper we develop an endogenous growth model with market regulations on explicitly modeled financial intermediaries to examine the effects of alternative government financing schemes on growth, inflation, and welfare. We find that in the presence of binding legal reserve requirements, a...

This paper analyzes growth and welfare effects of income taxation in a stochastic endogenous growth model with externalities in human-capital accumulation. The government participates in individual income risks by the collection of a flat-rate income tax that affects the mean and the variance of...