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Cost-benefit analysis and the marginal cost of public funds

Listed author(s):
  • Nigar HASHIMZADE

    ()

  • Gareth MYLES

    ()

The marginal cost of public funds (MCF) measures the cost to the economy of raising government revenue. The MCF can be used to guide reform of the tax system and to determine an efficient level of government expenditure. It can also be used as an input into cost-benefit analysis. Previous applications of the concept have developed a methodology appropriate to single countries. The application of the MCF within the EU context raises several important questions concerning tax and expenditure externalities between member states of an economic union. We extend the concept of the MCF to a setting that combines growth with fiscal federalism. It is intended that this represents a setting in which several issues relevant to the EU can be addressed.

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File URL: http://wp.demm.unimi.it/files/wp/2009/DEMM-2009_029wp.pdf
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Paper provided by Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano in its series Departmental Working Papers with number 2009-29.

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Date of creation: 23 Oct 2009
Handle: RePEc:mil:wpdepa:2009-29
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