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Commodity Taxation and Economic Growth

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  • Koichi Futagami
  • Junko Doi

Abstract

We construct a variety expansion growth model following Grossman and Helpman (1991) and incorporate various groups of goods into the model. Each group has its own elasticity of substitution. We seek to determine the goods on which the government should impose higher rates of commodity tax in order to raise a certain amount of tax revenue. We thus reconsider the Ramsey Rule (the Inverse Elasticity Rule) in a growing economy.

Suggested Citation

  • Koichi Futagami & Junko Doi, 2004. "Commodity Taxation and Economic Growth," The Japanese Economic Review, Japanese Economic Association, vol. 55(1), pages 46-55, March.
    • Handle: RePEc:bla:jecrev:v:55:y:2004:i:1:p:46-55
    DOI: 10.1111/j.1468-5876.2004.00293.x
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    1. A. J. Auerbach & M. Feldstein (ed.), 1985. "Handbook of Public Economics," Handbook of Public Economics, Elsevier, edition 1, volume 1, number 1.
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    Cited by:

    1. Akihiko Kaneko & Daisuke Matsuzaki, 2009. "Consumption tax and economic growth in an overlapping generations model with money holdings," Journal of Economics, Springer, vol. 98(2), pages 155-175, November.
    2. David Bartolini, 2015. "Municipal fragmentation and economic performance in OECD TL2 regions," ERSA conference papers ersa15p607, European Regional Science Association.
    3. Kunihiko Konishi, 2013. "A Note on Commodity Taxation and Economic Growth," Discussion Papers in Economics and Business 13-22, Osaka University, Graduate School of Economics.
    4. Wang, Vey & Lai, Chung-Hui, 2010. "Franchise Fee, Tax/Subsidy Policies and Economic Growth," MPRA Paper 27745, University Library of Munich, Germany.
    5. Kunihiko Konishi, 2015. "A Note on Commodity Taxation and Economic Growth," Economics Bulletin, AccessEcon, vol. 35(1), pages 540-549.
    6. Sarah Nizamani, 2020. "Higher Taxes Reduce Economic Growth: Overwhelming International Evidence," PIDE Knowledge Brief 2020:14, Pakistan Institute of Development Economics.

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