We develop an endogenous growth model driven by externalities from both private and public capital. The government levies distortionary taxation to finance a publicly provided consumption good and public infrastructure. Firms face adjustment costs. We compare the optimal and time-consistent policies in a linearquadratic approximation of the model. Although the time-consistent equilibrium is sub...

I present a tractable dynamic model of political economy where disagreements about the composition of public spending result in implementation of short-sighted policies. The relative price of investment to consumption is excessively large in equilibrium due to over-taxation. Investment rates are too low which slows down growth along the transition. In the long run, this results in output, consu...

We consider an environment in which agents’ skills are private information and follow arbitrary stochastic processes. We prove that it is typically Pareto optimal for an individual’s marginal benefit of investing in capital to exceed his marginal cost of doing so. This wedge is consistent with a positive tax on capital income. We also prove that it is Pareto optimal for the marginal rate of sub...

A non-existent meaning in the field of personal taxation is given to the Frisch parameter. Using an Indirect Addilog System, we formulate a relationship between Frisch parameter and the discretionary income based on the different degree of urgency or priority of needs routed in the values of households’ consumption. As result, the concept of tax capacity can be interpreted in terms of utility, ...

BACKGROUND Native American tribes, as sovereign nations, are exempt from state tobacco excise taxation, and self-govern on-reservation activity in the USA. Under Federal law, state excise taxes are owed by non-members purchasing tobacco on tribal land, but states are limited in how they enforce or collect these taxes. This study highlights the various policy approaches that states have taken to...

Optimal Redistributive Taxation with Both Extensive and Intensive Responses This paper characterizes optimal income taxation when individuals respond along both the intensive and extensive margins. Individuals are heterogeneous across two dimensions: specifically, their skill and disutility of participation. Preferences over consumption and work effort can differ with respect to the level of sk...

Tax levels have important effects on cigarette prices and tax revenues. Over 70p of every pound spent on tobacco goes to the Chancellor of the Exchequer, yielding over 5 billion pounds. But the value of tobacco tax revenues have generally fallen--by 1986 they were 10% lower than at their peak in 1965, and tobacco revenue is becoming a smaller proportion of total tax receipts. The impact of a co...

Taxation of tobacco is a widely-used strategy that prompts smoking cessation among adults and reduces cigarette consumption among continuing smokers. Registered Indian tobacco use prevalence is at least double that of the rest of Canadians and is in part due to the lower cost of tobacco products purchased on reserve by Registered Indians (RIs) as they are tax exempt. Although registered Indian ...

In this paper, we propose the conception of Within-group Consumption-Dominance Curves in order to capture the impact of indirect tax reforms on poverty. Considering that the population is partitioned into many groups, which differ in needs, in health, in capability or other attributes, we introduce within-group transfers and between-group transfers via indirect taxation mechanisms in order to r...

I take a new look at the long-run implications of taxation through the lens of modern Schumpeterian growth theory. I focus on the latest vintage of models that sterilize the scale effect through a process of product proliferation that fragments the aggregate market into submarkets whose size does not increase with the size of the workforce. I show that the following interventions raise welfare:...