TY - JOUR
T1 - Growth effects of flat-rate taxes
AU - Stokey, N. L.
AU - Rebelo, S.
N1 - Copyright:
Copyright 2017 Elsevier B.V., All rights reserved.
PY - 1995
Y1 - 1995
N2 - Recent estimates of the potential growth effects of tax reform vary wildly, ranging from zero to eight percentage points. Using an endogenous growth model, this study assesses which model features and parameter values are important for determining the quantitative impact of tax reform. Finds that the critical parameters are factor shares, depreciation rates, the elasticity of intertemporal substitution, and the elasticity of labor supply. The elasticities of substitution in production, on the other hand, are relatively unimportant. The quantitative estimates in several recent papers are compared with each other and with some of the evidence from the US experience. Robert Lucas's conclusion, that tax reform would have little or no effect on the US growth rate, is theoretically robust and consistent with the evidence. -Authors
AB - Recent estimates of the potential growth effects of tax reform vary wildly, ranging from zero to eight percentage points. Using an endogenous growth model, this study assesses which model features and parameter values are important for determining the quantitative impact of tax reform. Finds that the critical parameters are factor shares, depreciation rates, the elasticity of intertemporal substitution, and the elasticity of labor supply. The elasticities of substitution in production, on the other hand, are relatively unimportant. The quantitative estimates in several recent papers are compared with each other and with some of the evidence from the US experience. Robert Lucas's conclusion, that tax reform would have little or no effect on the US growth rate, is theoretically robust and consistent with the evidence. -Authors
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U2 - 10.1086/261993
DO - 10.1086/261993
M3 - Article
AN - SCOPUS:0029482252
VL - 103
SP - 519
EP - 550
JO - Journal of Political Economy
JF - Journal of Political Economy
SN - 0022-3808
IS - 3
ER -