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Feedback Effects and the Laffer Landscape

Colorado College Working Paper No. 2007-06

22 Pages Posted: 3 Oct 2007 Last revised: 18 Dec 2009

John Robert Stinespring

University of Tampa - John H. Sykes College of Business

Date Written: September 2007

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 Classification: E1, H2, H3, H6

Suggested Citation

Stinespring, John Robert, Feedback Effects and the Laffer Landscape (September 2007). Colorado College Working Paper No. 2007-06. Available at SSRN: https://ssrn.com/abstract=1018767 or http://dx.doi.org/10.2139/ssrn.1018767

John Robert Stinespring (Contact Author)

University of Tampa - John H. Sykes College of Business ( email )

401 W. Kennedy Blvd.
Tampa, FL 33606-1490
United States
813-253-6221 (Phone)
813-258-7408 (Fax)

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