Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/48159 
Year of Publication: 
2011
Series/Report no.: 
ZEW Discussion Papers No. 11-041
Publisher: 
Zentrum für Europäische Wirtschaftsforschung (ZEW), Mannheim
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 growth and welfare maximizing tax rates. Secondly, it examines the distinct model outcomes in terms of their growth rates and welfare levels. This comparison highlights the range of trade-offs: the growth maximizing tax rate can be above, below, or equal to 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
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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