The hypothesis that cooperation between fiscal and monetary authorities to minimize the distortionary costs of financing an exogenous stream of government expenditures implies a long-run relationship between inflation and tax rates is called the revenue-smoothing hypothesis. This paper uses the marginal tax rate as a tax measure, and tests a hierarchy of hypoteses implied by the revenue-smoothing model.
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Paper provided by Regina - Department of Economics in its series Papers with number
71.
Length: 15 pages Date of creation: 1996 Date of revision: Handle: RePEc:fth:regina:71
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Find related papers by JEL classification: E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation