RT Report
T1 Dynamic Laffer curves
A1 Novales Cinca, Alfonso Santiago
A1 Ruiz Andújar, Jesús
AB Se discute la posibilidad de cambios en la política fiscal que mejoren el bienestar en las economías reales, en un modelo de crecimiento endógeno con acumulación de capital humano.AbstractIn an endogenous growth model with human capital accumulation, we discuss the possibility of welfare improving changes on the 1scal policy stance in some actual economies. First, we characterize the extent to which the initial fall in revenues produced by a permanent tax cut can be compensated by an increase in the tax base, due to a dynamic La#er curve e#ect, showing that there is, in fact, a non-trivial margin for substituting debt for taxes on labor and capital income. Second, we show  that the largest feasible reduction in labor income tax rates may easily produce a higher welfare gain than the largest feasible reduction in capital income tax rates.Two quali1cations: (a) feasible tax cuts exist only for a relatively high elasticity of intertemporal substitution of consumption, and (b) the preference for the largest feasible tax cut on labor income rather than that on capital income reverses for a low appreciation for leisure, relative to consumption, in the preferences of the representative agent.
PB Instituto Complutense de Análisis Económico. Universidad Complutense de Madrid
YR 2001
FD 2001
LK https://hdl.handle.net/20.500.14352/64465
UL https://hdl.handle.net/20.500.14352/64465
LA eng
NO JEL classi"cation: E62; O41; H30
DS Docta Complutense
RD 13 abr 2025