Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/189298 
Authors: 
Year of Publication: 
2002
Series/Report no.: 
Queen's Economics Department Working Paper No. 1011
Publisher: 
Queen's University, Department of Economics, Kingston (Ontario)
Abstract: 
The marginal cost of public funds is the equilibrium price at the intersection of the appropriately-defined demand curve for and the supply curve of public expenditure. In a world with identical people and with no excess burden of taxation, that price would have to be 1. Otherwise the median voter's choice of a demogrant - or of its opposite, a head tax - fixes the marginal cost of public funds at the ratio of the mean income to the median income. A proof of this assertion is presented not for its realism, but because it calls attention to the interaction of the different influences upon the marginal cost of public funds.
Subjects: 
Marginal Cost of Public Funds
JEL: 
H4
Document Type: 
Working Paper

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