Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25106
Authors: 
Trabandt, Mathias
Uhlig, Harald
Year of Publication: 
2006
Series/Report no.: 
SFB 649 discussion paper 2006,023
Abstract: 
The goal of this paper is to examine the shape of the Laffer curve quantitatively in a simple neoclassical growth model calibrated to the US as well as to the EU-15 economy. We show that the US and the EU-15 area are located on the left side of their labor and capital tax Laffer curves, but the EU-15 economy being much closer to the slippery slopes than the US. Our results indicate that since 1975 the EU-15 area has moved considerably closer to the peaks of their Laffer curves. We find that the slope of the Laffer curve in the EU-15 economy is much flatter than in the US which documents a much higher degree of distortions in the EU-15 area. A dynamic scoring analysis shows that more than one half of a labor tax cut and more than four fifth of a capital tax cut are self-financing in the EU-15 economy.
Subjects: 
Laffer curve
US and EU-15 economy
JEL: 
E0
E60
H0
Document Type: 
Working Paper

Files in This Item:
File
Size
941.78 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.