Colorado College Working Paper No. 2007-06
22 Pages Posted: 3 Oct 2007 Last revised: 18 Dec 2009
Date Written: September 2007
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: 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