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Feedback Effects and the Laffer Landscape
John Robert Stinespring University of Tampa - John H. Sykes College of Business September 2007 Colorado College Working Paper No. 2007-06 Abstract: 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.
Keywords: Laffer, dynamic scoring, growth, fiscal, debt JEL Classifications: E1, H2, H3, H6 Working Paper SeriesDate posted: October 03, 2007 ; Last revised: September 24, 2009Suggested CitationContact Information
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