IDEAS home Printed from https://ideas.repec.org/a/jns/jbstat/v222y2002i4p500-507.html
   My bibliography  Save this article

Taxation, Asset Bubbles, and Endogenous Growth / Besteuerung, Bubbles und Endogenes Wachstum

Author

Listed:
  • Wiedmer Thomas

    (Swiss National Bank, Bundesplatz 1, CH-3003 Bern.Tel.: ++41/+31/ 3270102, Fax: ++41/+31/3 270229)

Abstract

This paper examines the impact of different forms of taxation on economic growth in a model with endogenous technical progress and finitely-lived agents. We find that income taxes lower growth rates (given that income tax revenue is transferred to the old), whereas consumption taxes can, contrary to results usually reported in the literature, even spur growth rates. Therefore, tax reforms aimed to be revenue neutral and growth enhancing should envisage to lower direct taxes while increasing indirect taxes. If there is a bubble in the economy, i. e. a situation where prices of assets differ from their fundamental market values, growth rates are lower since investments are diverted away from productive investments in capital. A capital gains tax, though, limits the size of the bubble and, hence, affects growth rates positively in an economy with an asset bubble. This result is in contrast to economies without asset bubbles, where a capital gains tax usually decreases growth rates.

Suggested Citation

  • Wiedmer Thomas, 2002. "Taxation, Asset Bubbles, and Endogenous Growth / Besteuerung, Bubbles und Endogenes Wachstum," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 222(4), pages 500-507, August.
    • Handle: RePEc:jns:jbstat:v:222:y:2002:i:4:p:500-507
    DOI: 10.1515/jbnst-2002-0407
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/jbnst-2002-0407
    Download Restriction: no
    File URL: https://libkey.io/10.1515/jbnst-2002-0407?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Hendricks, Lutz, "undated". "Taxation and Long-Run Growth," Working Papers 96/2, Arizona State University, Department of Economics.
    3. Gene M. Grossman & Elhanan Helpman, 1994. "Endogenous Innovation in the Theory of Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 23-44, Winter.
    4. Gilles Saint-Paul, 1992. "Fiscal Policy in an Endogenous Growth Model," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(4), pages 1243-1259.
    5. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66(6), pages 467-467.
    6. 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.
    7. Jones, Larry E. & Manuelli, Rodolfo E., 1992. "Finite lifetimes and growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 171-197, December.
    8. repec:dau:papers:123456789/10096 is not listed on IDEAS
    9. Hendricks, Lutz, 1999. "Taxation and long-run growth1," Journal of Monetary Economics, Elsevier, vol. 43(2), pages 411-434, April.
    10. Levine, Ross, 1991. "Stock Markets, Growth, and Tax Policy," Journal of Finance, American Finance Association, vol. 46(4), pages 1445-1465, September.
    11. Mino, Kazuo, 1989. "Income taxation and endogenous growth," Economics Letters, Elsevier, vol. 31(4), pages 325-329, December.
    12. Paul M. Romer, 1994. "The Origins of Endogenous Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 3-22, Winter.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Robinson, James A. & Srinivasan, T.N., 1993. "Long-term consequences of population growth: Technological change, natural resources, and the environment," Handbook of Population and Family Economics, in: M. R. Rosenzweig & Stark, O. (ed.), Handbook of Population and Family Economics, edition 1, volume 1, chapter 21, pages 1175-1298, Elsevier.
    2. Rivas, Luis A., 2003. "Income taxes, spending composition and long-run growth," European Economic Review, Elsevier, vol. 47(3), pages 477-503, June.
    3. Weizsäcker, Robert K. von & Wigger, Berthold U., 2001. "Rentenfinanzierung und intergenerationelle Gerechtigkeit : Eine wachstumstheoretische Perspektive," Discussion Papers 606, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre.
    4. Pecchenino, Rowena A & Pollard, Patricia S, 1997. "The Effects of Annuities, Bequests, and Aging in an Overlapping Generations Model of Endogenous Growth," Economic Journal, Royal Economic Society, vol. 107(440), pages 26-46, January.
    5. Rensman, Marieke, 1996. "Economic growth and technological change in the long run : a survey of theoretical and empirical literature," Research Report 96C10, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    6. repec:dgr:rugsom:96c10 is not listed on IDEAS
    7. Berthold U. Wigger, 2002. "Social Security and Growth in an Altruistic Economy," German Economic Review, Verein für Socialpolitik, vol. 3(1), pages 53-80, February.
    8. Andrés Rodríguez-Pose & Riccardo Crescenzi, 2008. "Mountains in a flat world: why proximity still matters for the location of economic activity," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 1(3), pages 371-388.
    9. repec:ebl:ecbull:v:2:y:2002:i:1:p:1-15 is not listed on IDEAS
    10. Andreas Irmen & Berthold U. Wigger, 2002. "Trade Union Objectives and Economic Growth," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 59(1), pages 49-67, February.
    11. Ho, Wai-Hong & Wang, Yong, 2007. "Factor income taxation and growth under asymmetric information," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 775-789, April.
    12. Aykut Kibritçioglu, 2002. "On the Smithian origins of "new" trade and growth theories," Economics Bulletin, AccessEcon, vol. 2(1), pages 1-15.
    13. repec:rre:publsh:v:34:y:2004:i:1:p:72-94 is not listed on IDEAS
    14. Voosholz, Frauke, 2014. "A survey on modeling economic growth. With special interest on natural resource use," CAWM Discussion Papers 69, University of Münster, Münster Center for Economic Policy (MEP).
    15. Jones, Larry E. & Manuelli, Rodolfo E., 1997. "The sources of growth," Journal of Economic Dynamics and Control, Elsevier, vol. 21(1), pages 75-114, January.
    16. Long, N.V. & Wong, K.Y., 1996. "Endogenous Growth and International Trade: A Survey," Working Papers 96-07, University of Washington, Department of Economics.
    17. Alejandro Díaz-Bautista, 2003. "Convergence And Economic Growth Considering Human Capital And R&D Spillovers," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 2(2), pages 127-143, Junio 200.
    18. Vaitsos, Constantine V., 2003. "Growth Theories Revisited: Enduring Questions with Changing Answers," UNU-INTECH Discussion Paper Series 2003-09, United Nations University - INTECH.
    19. Willem H. Buiter & Kenneth M. Kletzer, 1995. "Capital Mobility, Fiscal Policy, and Growth under Self-Financing of Human Capital Formation," Canadian Journal of Economics, Canadian Economics Association, vol. 28(s1), pages 163-194, November.
    20. Wigger, Berthold U., 1999. "Alterssicherung und Wachstum," Discussion Papers 569, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre.
    21. Ruttan, Vernon W., 1998. "Growth Economics And Development Economics: What Should Development Economists Learn (If Anything) From The New Growth Theory?," Bulletins 12972, University of Minnesota, Economic Development Center.
    22. Simon, György, 1998. "Növekedési tényezők, ár-, bér- és profitmechanizmus a modern gazdaságban [Factors of growth, price, wage and profit mechanism in the modern economy]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(2), pages 174-192.
    23. Bennett T. McCallum, 1996. "Neoclassical vs. endogenous growth analysis: an overview," Economic Quarterly, Federal Reserve Bank of Richmond, issue Fall, pages 41-71.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jns:jbstat:v:222:y:2002:i:4:p:500-507. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.