Feedback Effects and the Laffer Landscape
John Robert Stinespring
University of Tampa - John H. Sykes College of Business
Colorado College Working Paper No. 2007-06
This paper combines the dynamic scoring literature with Laffer curve analysis to reveal the relationship between feedback effects and the shape of the Laffer curve. A Neoclassical growth model with multiple government expenditures and revenues is used and the conditions under which a tax cut can be self-financing are explored. Steady state results indicate that fiscal regimes with a greater reliance on debt financing or lump-sum transfers are more likely to be self-financing than those with larger expenditures on government consumption and productivity-enhancing public capital.
Number of Pages in PDF File: 22
Keywords: Laffer, dynamic scoring, growth, fiscal, debt
JEL Classification: E1, H2, H3, H6
Date posted: October 3, 2007 ; Last revised: December 18, 2009
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