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A Note on Taxation, Imperfect Competition and the Balanced Budget Multiplier

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  • Hassan Molana
  • Thomas Moutos

Abstract

This paper explores the implications of the form of taxation for the size of the balanced budget multiplier in imperfectly competitive models. The authors show that the balanced budget multiplier is positive but less than unity when there is either a lump-sum or a proportional profit tax, that it is zero when taxes are proportional to total income (wage and profit income), and that it can be negative when a proportional tax is levied on wage income alone. Copyright 1992 by Royal Economic Society.

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Bibliographic Info

Paper provided by University of Stirling, Division of Economics in its series Working Papers Series with number 91/4.

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Date of creation: Feb 1991
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Handle: RePEc:stl:stlewp:91/4

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Postal: Division of Economics, University of Stirling, Stirling, Scotland FK9 4LA
Phone: +44 (0)1786 467473
Fax: +44 (0)1786 467469
Web page: http://www.econ.stir.ac.uk/
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