The Behavioral Model for Estimating the Laffer Fiscal Points
Bulletin of the Georgian National Academy of Sciences, Vol. 7, No. 1, 2013
9 Pages Posted: 28 May 2013
Date Written: May 27, 2013
The article examines the approach to estimating the effect of the tax burden on the amount of total output and budget revenues. This approach uses a behavioral model, with a specific version of an entropy function. The suggested model makes it possible to determine the fiscal points corresponding to the maximum production effect and the budget’s maximum tax revenues. The conclusion is drawn that, these points correspond to the Laffer concept, since for the points of the behavioral model the amount of use of economic resources occurs endogenously. The results obtained are illustrated using existing data on the U.S. economy.
Keywords: average tax rate, production technology, production function, entropy function, Balatski fiscal points, Laffer fiscal points, optimal tax rate, potential level of output
JEL Classification: E19, E62, H21
Suggested Citation: Suggested Citation