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Capital Income Tax, Linear R&D Technology, and Economic Growth

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  • Tenryu, Yohei

Abstract

This paper shows that, in a R&D-based growth model in which vertical and horizontal innovations occur simultaneously, increasing the capital income tax leads to faster growth. For this result to hold, the production function for both vertical and horizontal innovations must have constant returns to scale.

Suggested Citation

  • Tenryu, Yohei, 2017. "Capital Income Tax, Linear R&D Technology, and Economic Growth," MPRA Paper 78706, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:78706
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    References listed on IDEAS

    as
    1. Hiraguchi, Ryoji & Shibata, Akihisa, 2015. "Taxing capital is a good idea: The role of idiosyncratic risk in an OLG model," Journal of Economic Dynamics and Control, Elsevier, vol. 52(C), pages 258-269.
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    6. Peretto, Pietro F, 2003. "Fiscal Policy and Long-Run Growth in R&D-Based Models with Endogenous Market Structure," Journal of Economic Growth, Springer, vol. 8(3), pages 325-347, September.
    7. Chamley, Christophe, 1986. "Optimal Taxation of Capital Income in General Equilibrium with Infinite Lives," Econometrica, Econometric Society, vol. 54(3), pages 607-622, May.
    8. Uhlig, Harald & Yanagawa, Noriyuki, 1996. "Increasing the capital income tax may lead to faster growth," European Economic Review, Elsevier, vol. 40(8), pages 1521-1540, November.
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    Keywords

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    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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