Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/271966 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10322
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
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 either its definition or its quantification. The purpose of this paper is to provide a brief up-to-date guide to the theoretical background, practical application, and empirical quantification of the MCPF, taking into account some recent developments in the public finance literature.
Subjects: 
benefit-cost analysis
public investment
excess burden
distortions
public goods
taxes
JEL: 
D61
H41
H53
H21
Document Type: 
Working Paper
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