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Distortionary Taxes and Economic Growth in a Political-Economy Model of a Creative Region

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  • Amitrajeet A. Batabyal

    (Rochester Institute of Technology)

  • Seung Jick Yoo

    (Sookmyung Women’s University)

Abstract

We analyze a stylized creative region populated by three groups of individuals: the elites who hold political and taxing power, the entrepreneurial creative class that produces a knowledge good, and workers. Political competition between the elites and the creative class results in the elites levying distortionary taxes on the creative class. We provide a rationale for this kind of taxation and then present two results. First, we demonstrate that this kind of distortionary taxation reduces the equilibrium growth rate of the economy of our creative region. Second, we explain why this negative result arises.

Suggested Citation

  • Amitrajeet A. Batabyal & Seung Jick Yoo, 2025. "Distortionary Taxes and Economic Growth in a Political-Economy Model of a Creative Region," Networks and Spatial Economics, Springer, vol. 25(3), pages 669-680, September.
    • Handle: RePEc:kap:netspa:v:25:y:2025:i:3:d:10.1007_s11067-025-09678-y
    DOI: 10.1007/s11067-025-09678-y
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