IDEAS home Printed from https://ideas.repec.org/a/mhr/finarc/urnsici0015-2218(201809)733_340fpcwra_2.0.tx_2-r.html
   My bibliography  Save this article

Financing Public Capital When Rents Are Back: A Macroeconomic Henry George Theorem

Author

Listed:
  • Linus Mattauch
  • Jan Siegmeier
  • Ottmar Edenhofer
  • Felix Creutzig

Abstract

By taxing rents, governments can avoid a trade-off between productivity-enhancing public investment and efficiency losses from raising funds. However, it is unclear whether the rents present in a growing economy are sufficient to finance the socially optimal investment. We prove that the social optimum can be attained if the income share from a fixed factor, such as land, exceeds the public investment requirement. We thus translate the Henry George Theorem from urban economics to neoclassical and endogenous growth settings: here, the socially optimal land rent tax rate is below 100 %. Our finding may address the underfunding of national infrastructure investments.

Suggested Citation

  • Linus Mattauch & Jan Siegmeier & Ottmar Edenhofer & Felix Creutzig, 2018. "Financing Public Capital When Rents Are Back: A Macroeconomic Henry George Theorem," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 74(3), pages 340-360, September.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(201809)73:3_340:fpcwra_2.0.tx_2-r
    DOI: 10.1628/fa-2018-0011
    as

    Download full text from publisher

    File URL: https://www.mohrsiebeck.com/en/article/financing-public-capital-when-rents-are-back-a-macroeconomic-henry-george-theorem-101628fa-2018-0011
    Download Restriction: Fulltext access is included for subscribers to the printed version.
    File URL: https://libkey.io/10.1628/fa-2018-0011?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Richters, Oliver & Siemoneit, Andreas, 2021. "Making markets just: Reciprocity violations as key intervention points," ZOE Discussion Papers 7, ZOE. institute for future-fit economies, Bonn.
    2. Mattauch, Linus & Klenert, David & Stiglitz, Joseph E. & Edenhofer, Ottmar, 2022. "Overcoming wealth inequality by capital taxes that finance public investment," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 383-395.
    3. Vejchodská, Eliška & Barreira, Ana Paula & Auziņš, Armands & Jürgenson, Evelin & Fowles, Steven & Maliene, Vida, 2022. "Bridging land value capture with land rent narratives," Land Use Policy, Elsevier, vol. 114(C).

    More about this item

    Keywords

    land rent; public investment; infrastructure; Henry George Theorem; optimal growth;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land

    Statistics

    Access and download statistics

    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:mhr:finarc:urn:sici:0015-2218(201809)73:3_340:fpcwra_2.0.tx_2-r. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Thomas Wolpert (email available below). General contact details of provider: https://www.mohrsiebeck.com/fa .

    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.