Using a finance-constrained model, as in Barinci and Cheron (2001), this paper examines the role of procyclical and countercyclical tax rates on labor and capital income in aggregate fluctuations driven by the beliefs of agents. The analysis shows that the cyclicality of labor income tax rate has the monotonically negative impact on the possibility of indeterminacy, while the non-monotonic rela...

    In 2010, the World Bank categorized countries in per capita gross domestic product in terms of purchasing power parity (at constant 1990 prices) in three categories: low, middle (lower and upper) and high income. If a country caught at least 28 years in lower middle income level and at least 14 years caught in upper middle-income level, then they are trapped in lower middle and upper middle...

Previous work on the effect of taxes on foreign direct investment (FDI) focused primarily on capital income taxes. We investigate the proposition that other forms of taxation may also deter FDI. We use tax ratios, i.e., average effective tax rates, on consumption, labor and capital income for a panel of 25 OECD countries from 1975-2006. We find that increases in relative tax rates on capital in...

Chapter Outline Designing Broad-Based Taxes: The Economic Objectives 171 Ability to Pay: Theoretical Considerations 173 Two Preliminary Considerations 173 Horizontal Equity 174 From Horizontal Equity to the Ideal Tax Base 174 The Three Principles of Tax Design 174 People Bear the Tax Burden 174 Individuals Sacrifice Utility 174 The Ideal Tax Base as the Best Surrogate Measure of Utility 175 Hai...

1 The study employs the Deininger and Squire (1996) set of Gini coefficients for 49 developed and developing countries from 1947-94. It uses five-year averages of these and all explanatory variable data. Previous chapters of this report have emphasized the role of factor prices, and particularly the wages of unskilled workers, as a key determinant of income inequality. Through their impact on f...

The paper surveys some main results in the theory of capital income taxation in the open economy; reviews recent trends in international taxation, and discusses alternative blueprints for fundamental capital income tax reform from the perspective of an open economy faced with growing mobility of capital

The role of human capital composition has been given importance in the most recent endogenous growth models. Assuming that primary as well as secondary education is more suitable for imitation and higher education is more appropriate for innovation, this paper empirically investigates whether the contribution of human capital to productivity growth depends on the composition of human capital an...