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Title:Growth and welfare maximization in models of public finance and endogenous growth PDF Logo
Authors:Misch, Florian
Gemmell, Norman
Kneller, Richard
Issue Date:2008
Series/Report no.:CREDIT Research Paper 08/09
Abstract:This paper evaluates the trade-off between growth and welfare maximization from two perspectives. Firstly, it synthesizes and extends endogenous growth models with public finance to compare the growth and welfare maximizing tax rates. Secondly, it examines the distinct model outcomes in terms of the growth rates and welfare levels. This comparison highlights the range of trade-offs: the growth maximizing tax rate can lie above, below, or on the welfare maximizing equivalent. We find however that even relatively large differences in growth and welfare maximizing tax rates translate into relatively small differences in growth rates, and, in some cases, welfare levels.
Subjects:Economic Growth
Productive Public Spending
Optimal Fiscal Policy
JEL:E62
H21
H50
O40
Document Type:Working Paper
Appears in Collections:CREDIT Research Papers, The University of Nottingham

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