Optimal Tariffs, Optimal Taxes, and Economic Development

Loewy, Michael B.

doi:10.2139/ssrn.360320

Abstract

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Optimal Tariffs, Optimal Taxes, and Economic Development

Michael B. Loewy

University of South Florida, Department of Economics

November 2002

Abstract:
Cross-section and time-series data show that nations substitute income taxes for tariffs as they develop. This paper confronts this observation within the context of a two-country open-economy endogenous growth model in which public expenditure is financed by an optimal tariff and income tax the second of which is subject to an administrative cost. The model is calibrated and its transition is shown to yield time paths for the shares of total government revenue derived from the tariff and the income tax that are consistent with the data.

Number of Pages in PDF File: 25

Keywords: Optimal Tariffs, Optimal Taxes, Growth

JEL Classification: E62, F43, H21

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Date posted: January 16, 2003

Suggested Citation

Loewy, Michael B., Optimal Tariffs, Optimal Taxes, and Economic Development (November 2002). Available at SSRN: http://ssrn.com/abstract=360320 or http://dx.doi.org/10.2139/ssrn.360320

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Michael B. Loewy (Contact Author)

University of South Florida, Department of Economics ( email )

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