On the Laffer-Keynesian Synthesis

GFSIS Center for Applied Economic Studies Research Paper - 04.2013

91 Pages Posted: 5 Aug 2013

See all articles by Iuri Ananiashvili

Iuri Ananiashvili

Ivane Javakhishvili Tbilisi State University - Department of Econometrics

Vladimer Papava

Ivane Javakhishvili Tbilisi State University

Date Written: August 4, 2013

Abstract

Keynesian models deal with the situation when aggregate supply is not dependent on tax rates, while aggregate demand, especially the part of it that relates to consumption, is the function of taxes. Supply-side economics also considers only a single aspect of the tax issue in the Laffer Curve, which emphasizes the impact of the tax rate on aggregate supply. The single-sidedness of the above theories can be overcome by the Laffer-Keynesian Synthesis. The model of macroeconomic equilibrium allows for this synthesis, in which aggregate demand and aggregate supply are represented as functions of the tax burden.

Keywords: tax policy, tax burdan, aggregate demand, aggregate supply, fiscal points, Laffer Effect, Laffer-Keynesian Synthesis

JEL Classification: E62, H21, H61

Suggested Citation

Ananiashvili, Iuri and Papava, Vladimer, On the Laffer-Keynesian Synthesis (August 4, 2013). GFSIS Center for Applied Economic Studies Research Paper - 04.2013, Available at SSRN: https://ssrn.com/abstract=2305760 or http://dx.doi.org/10.2139/ssrn.2305760

Iuri Ananiashvili

Ivane Javakhishvili Tbilisi State University - Department of Econometrics ( email )

1, Chavchavdze Ave
Building I
Tbilisi, 0218
Georgia

Vladimer Papava (Contact Author)

Ivane Javakhishvili Tbilisi State University ( email )

1, Ilia Tchavtchavadze avenue
Tbilisi, Tbilisi 0179
Georgia
+995 32 222-0241 (Phone)
+995 32 222-5107 (Fax)

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