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On economic growth and investment income taxation in a creative region

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  • Donovan, Pierce J.
  • Batabyal, Amitrajeet A.

Abstract

We study economic growth and investment income taxation in a region that is creative in the sense of Richard Florida. Specifically, this region possesses both creative and physical capital. Of the two sectors in this region, one produces final consumption goods and the other produces investment or physical capital goods. Our analysis of the working of this creative region leads to three results. First, we derive an analytic expression that links the growth rate of the relative price of physical capital goods to the growth rate of physical capital in the consumption goods sector. Second, we highlight the connection between the growth rates of consumption and that of physical capital in the consumption goods sector. Finally, we analyze the effect that the taxation of investment income has on the equilibrium growth rate of consumption in our creative region.

Suggested Citation

  • Donovan, Pierce J. & Batabyal, Amitrajeet A., 2015. "On economic growth and investment income taxation in a creative region," International Review of Economics & Finance, Elsevier, vol. 38(C), pages 67-72.
    • Handle: RePEc:eee:reveco:v:38:y:2015:i:c:p:67-72
    DOI: 10.1016/j.iref.2015.01.002
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    References listed on IDEAS

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    1. Rebelo, Sergio, 1991. "Long-Run Policy Analysis and Long-Run Growth," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 500-521, June.
    2. David Mcgranahan & Timothy Wojan, 2007. "Recasting the Creative Class to Examine Growth Processes in Rural and Urban Counties," Regional Studies, Taylor & Francis Journals, vol. 41(2), pages 197-216.
    3. Usman, Umer & Batabyal, Amitrajeet A., 2014. "Goods production, learning by doing, and growth in a region with creative and physical capital," International Review of Economics & Finance, Elsevier, vol. 33(C), pages 92-99.
    4. Richard Florida & Charlotta Mellander & Kevin Stolarick, 2008. "Inside the black box of regional development: human capital, the creative class and tolerance," Journal of Economic Geography, Oxford University Press, vol. 8(5), pages 615-649, September.
    5. Batabyal, Amitrajeet A. & DeAngelo, Gregory J., 2012. "Goods allocation by queuing and the occurrence of violence: A probabilistic analysis," International Review of Economics & Finance, Elsevier, vol. 24(C), pages 1-7.
    6. Nathan, Max, 2007. "The Wrong Stuff? Creative Class Theory and Economic Performance in UK Cities," MPRA Paper 29486, University Library of Munich, Germany.
    7. Amitrajeet Batabyal & Peter Nijkamp, 2010. "Richard Florida’s creative capital in a trading regional economy: a theoretical investigation," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 44(2), pages 241-250, April.
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    Cited by:

    1. Amitrajeet A. BATABYAL, 2016. "Increasing Returns In A Model With Creative And Physical Capital: Does A Balanced Growth Path Exist?," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(3), pages 31-35, December.
    2. Amitrajeet A. BATABYAL, 2016. "Increasing Returns In A Model With Creative And Physical Capital: Does A Balanced Growth Path Exist?," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(3), pages 31-35, December.

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    More about this item

    Keywords

    Creative capital; Creative region; Economic growth; Investment income; Taxation;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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