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Tax Policy for Economic Recovery and Growth

Author

Listed:
  • Christopher Heady
  • Åsa Johansson
  • Jens Arnold
  • Bert Brys
  • Laura Vartia

Abstract

This paper identifies tax policy that both speeds recovery from the current economic crisis and contributes to long-run growth. This is a challenge because short-term recovery requires increases in demand while long-term growth requires increases in supply. As short-term tax concessions can be hard to reverse, this implies that policies to alleviate the crisis could compromise long-run growth. The analysis makes use of recent evidence on the impact of tax structure on economic growth to identify which growth-enhancing tax changes can also aid recovery, taking account of the need to protect those on low incomes.

Suggested Citation

  • Christopher Heady & Åsa Johansson & Jens Arnold & Bert Brys & Laura Vartia, 2009. "Tax Policy for Economic Recovery and Growth," Studies in Economics 0925, School of Economics, University of Kent.
    • Handle: RePEc:ukc:ukcedp:0925
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    File URL: https://www.kent.ac.uk/economics/repec/0925.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Taxation; Tax Design; Tax Policy; Economic growth; Economic recovery;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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