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Joint Production of Goods and Knowledge: Implications for Tax Reform

  • Carlo Perroni

This paper examines the welfare impacts of tax reformin the context of a perfect-foresight two-sector model with linearendogenous growth, where new knowledge is a byproduct of productionactivities. A calibrated version of this model is used to obtainnumerical estimates of the welfare impact of equal-yield unanticipatedtax changes through transitional analysis. Simulation resultsindicate that the size of the welfare effects of income tax reformdepends crucially on the sectoral composition of final consumptionand investment demand, and on the interplay between output complementaritylinkages and factor intensities. Copyright Kluwer Academic Publishers 1997

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File URL: http://hdl.handle.net/10.1023/A:1008638320437
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Article provided by Springer in its journal International Tax and Public Finance.

Volume (Year): 4 (1997)
Issue (Month): 2 (May)
Pages: 149-165

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Handle: RePEc:kap:itaxpf:v:4:y:1997:i:2:p:149-165
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  3. Nerlove, Marc & Razin, Assaf & Sadka, Efraim & von Weizsacker, Robert K., 1993. "Comprehensive income taxation, investments in human and physical capital, and productivity," Journal of Public Economics, Elsevier, vol. 50(3), pages 397-406, March.
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  10. Perroni, Carlo, 1995. "Assessing the Dynamic Efficiency Gains of Tax Reform When Human Capital Is Endogenous," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(4), pages 907-25, November.
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  19. Jones, Larry E & Manuelli, Rodolfo E & Rossi, Peter E, 1993. "Optimal Taxation in Models of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 485-517, June.
  20. Pecorino, Paul, 1994. "The Growth Rate Effects of Tax Reform," Oxford Economic Papers, Oxford University Press, vol. 46(3), pages 492-501, July.
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