Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/29932
Authors: 
Kunze, Lars
Year of Publication: 
2009
Series/Report no.: 
Ruhr economic papers 113
Abstract: 
It has been shown that higher capital taxes can have a growth-enhancing effect when combined with a revenue-compensating cut in wage taxes (Uhlig and Yanagawa 1996; European Economic Review 40, 1521-1540) or with an expansion in productivity-increasing public services (Rivas 2003; European Economic Review 47, 477-503). The present paper demonstrates that these results critically hinge on the existence of a bequest motive. It is shown that a wage-tax cut is no longer growth-enhancing when bequests are operative. By way of contrast, increasing productive public services may well boost growth. The theoretical findings are illustrated by numerical simulations based on US data.
Subjects: 
Capital income taxation
public spending
overlapping generations
growth
family altruism
JEL: 
D64
D91
H24
H50
O40
ISBN: 
978-3-86788-126-5
Document Type: 
Working Paper

Files in This Item:
File
Size
303.21 kB





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