Schumpeterian Growth with Productive Public Spending and Distortionary Taxation
Schumpeterian growth theory eliminates the scale effect by positing a process of development of new product lines that fragments the aggregate market in submarkets whose size does not increase with population or the size of the workforce. This entails the sterilization of the growth effects of selected fiscal variables. This insight is applied to shed new light on the role of distortionary taxes on consumption, household labor and assets income, corporate income, and of productive public spending. The framework allows the identification of which of these fiscal variables have permanent (steady-state) growth effects, and which ones have only transitory effects. It also allows the transitional dynamics to be solved analytically and thus the analysis of the welfare effects of revenue-neutral changes in tax structure. It is found that replacing taxes that distort labor supply with taxes that distort saving/investment choices raises welfare, and the intuition behind this surprising result is discussed. Copyright � 2007 The Author; Journal compilation � 2007 Blackwell Publishing Ltd.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 11 (2007)
Issue (Month): 4 (November)
|Contact details of provider:|| Web page: http://www.blackwellpublishing.com/journal.asp?ref=1363-6669|
|Order Information:||Web: http://www.blackwellpublishing.com/subs.asp?ref=1363-6669|
When requesting a correction, please mention this item's handle: RePEc:bla:rdevec:v:11:y:2007:i:4:p:699-722. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.