Recent studies on Laffer curves (tax revenue curves) find that the curve for consumption tax might not be hump-shaped, but monotonically increasing, whereas labor income is hump-shaped. This study investigates cause of this difference in shapes two curves, by decomposing effects an increase a rate base as product parts: (i) relative price leisure (RPL), and (ii) substitution effects. It shown f...

According to the Lucas-Stokey result, a government can structure its debt maturity guarantee commitment optimal fiscal policy by future governments. In this paper, we overturn conclusion, showing that it does not generally hold in same model and under definition of time consistency as Lucas-Stokey. Our argument rests on existence an overlooked problem cannot be remedied with maturity: will nece...

Recently much attention has been given to the idea of reducing the debt of developing countries through a "menu approach" of schemes that attempt to harness the discounts on debt in the secondary market. This paper, after reviewing the rationale for the orthodox strategy of concerted lending and the case for debt forgiveness, examines the logic behind several market-based debt reduction schemes...

This paper analyzes the existence of an inflation tax Laffer curve (ITLC) in the context of two standard optimizing monetary models: a cash-in-advance model and a money in the utility function model. Agents’ preferences are characterized in the two models by a constant relative risk aversion utility function. Explosive hyperinflation rules out the presence of an ITLC. In the context of a cash-i...

This paper demonstrates, through a controlled experiment, that the ‘‘Laffer curve” phenomenondoes not always reflect a conventional income leisure trade-off.Whether out of reason or out of emotion, taxpayers may also bewilling to punish intentionally unfair tax setters by working less than they would under the same exogenous circumstances. We conduct a real effort experiment in which a player A...

A formula for the revenue maximizing top tax rate is derived as a function of three elasticities. The formula applies to static models and to steady states of dynamic models and is relevant for the top tax rate on any component of income. The formula is applied to several classic models. The application of the formula is also illustrated using a quantitative human capital model. © 2017 Elsevier...