Optimal Provision Of Public Inputs In A Second Best Scenario (*)
. This paper studies the optimal provision of public inputs under two different tax settings: with lump-sum taxes and with taxes on labour. After obtaining the optimality rules for the provision of public inputs, a numerical simulation is carried out to compute the level of public spending in each scenario. We find that a second- best rule has to be followed when lump-sum taxes are not available, even though the labour taxes are set optimally. Another result we obtain is that the level of public input provided under the second best scenario is higher than that corresponding to the first best outcome. The effect of changes to some parameters on the level of public input is also studied.
|Date of creation:|
|Contact details of provider:|| Postal: Avda. Cardenal Herrera Oria, 378, 28035 Madrid|
Web page: http://www.ief.es
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- James P. Feehan & Mutsumi Matsumoto, 2000. "Productivity-enhancing public investment and benefit taxation: the case of factor-augmenting public inputs," Canadian Journal of Economics, Canadian Economics Association, vol. 33(1), pages 114-121, February.
- J. E. Stiglitz & P. Dasgupta, 1971.
"Differential Taxation, Public Goods, and Economic Efficiency,"
Review of Economic Studies,
Oxford University Press, vol. 38(2), pages 151-174.
- Joseph E. Stiglitz & Partha Dasgupta, 1970. "Differential Taxation, Public Goods, and Economic Efficiency," Cowles Foundation Discussion Papers 299, Cowles Foundation for Research in Economics, Yale University.
- Ming Chang, 2000. "Rules and Levels in the Provision of Public Goods: The Role of Complementarities between the public Good and Taxed Commodities," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(1), pages 83-91, February.
- Wildasin, David E, 1984. "On Public Good Provision with Distortionary Taxation," Economic Inquiry, Western Economic Association International, vol. 22(2), pages 227-243, April.
- Schob, Ronnie, 1994. "On Marginal Cost and Marginal Benefit of Public Funds," Public Finance = Finances publiques, , vol. 49(1), pages 87-106.
- Feehan, James P, 1989. "Pareto-Efficiency with Three Varieties of Public Input," Public Finance = Finances publiques, , vol. 44(2), pages 237-248.
- Dahlby, Bev & Wilson, Leonard S., 2003. "Vertical fiscal externalities in a federation," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 917-930, May.
- Miguel-Angel López García, 2005. "La vivienda y la reforma fiscal de 1998: un ejercicio de simulación," Hacienda Pública Española, IEF, vol. 175(4), pages 123-147, december.
- Miguel Ángel López García, "undated". "La Vivienda Y La Reforma Fiscal De 1998: Un Ejercicio De Simulación(*)," Working Papers 7-04 Classification-JEL :, Instituto de Estudios Fiscales.
- A. B. Atkinson & N. H. Stern, 1974. "Pigou, Taxation and Public Goods," Review of Economic Studies, Oxford University Press, vol. 41(1), pages 119-128.
- Thomas Aronsson & Tomas Sjögren, 2002. "Income Taxation, Commodity Taxation and Provision of Public Goods under Labor Market Distortions," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 59(3), pages 347-347, August.
- Aronsson, Thomas & Sjögren, Tomas, 2001. "Income Taxation, Commodity Taxation and Provision of Public Goods under Labor Market Distortions," Umeå Economic Studies 568, Umeå University, Department of Economics.
- José María Arranz & Carlos García-Serrano, "undated". "¿Qué Ha Sucedido Con La Estabilidad Del Empleo En España?. Un Análisis Desagregado Con Datos De La Epa: 1987-2003(*)," Working Papers 4-04 Classification-JEL :, Instituto de Estudios Fiscales.
- Triest, Robert K, 1990. "The Relationship between the Marginal Cost of Public Funds and Marginal Excess Burden," American Economic Review, American Economic Association, vol. 80(3), pages 557-566, June.
- Charles L. Ballard & Don Fullerton, 1992. "Distortionary Taxes and the Provision of Public Goods," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 117-131, Summer.
- Charles L. Ballard & Don Fullerton, 1990. "Distortionary Taxes and the Provision of Public Goods," NBER Working Papers 3506, National Bureau of Economic Research, Inc.
- Sandmo, Agnar, 1972. "Optimality rules for the provision of collective factors of production," Journal of Public Economics, Elsevier, vol. 1(1), pages 149-157, April.
- Gaube, Thomas, 2000. "When do distortionary taxes reduce the optimal supply of public goods?," Journal of Public Economics, Elsevier, vol. 76(2), pages 151-180, May.
- Liqun Liu, 2004. "The Marginal Cost of Funds and the Shadow Prices of Public Sector Inputs and Outputs," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(1), pages 17-29, January.
- Lars Hokonsen, 1998. "An Investigation into Alternative Representations of the Marginal Cost of Public Funds," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(3), pages 329-343, July.
- Fidel Picos Sánchez, "undated". "Modelo Dual De Irpf Y Equidad: Un Nuevo Enfoque Teórico Y Su Aplicación Al Caso Español," Working Papers 8-04 Classification-JEL :, Instituto de Estudios Fiscales. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:hpe:wpaper:y:2005:i:17. 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: (Ana Belén Miquel Burgos)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.