TAXES, PRODUCTION TECHNOLOGY AND ECONOMIC GROWTH
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TAXES, PRODUCTION TECHNOLOGY AND ECONOMIC GROWTH
Annotation
PII
S0207-36760000495-3-1
Publication type
Article
Status
Published
Edition
Pages
172-196
Abstract
The article discusses two different approaches to assess the impact of the aggregate tax burden upon the volume of the output and budget revenues. The first approach is based upon the transformational type of model and the other is based upon the behavioral type of model. A production function with a variable elasticity coefficients plays a key role in the first approach whilst the specific option of the entropy function comes into play in the second. Both of the models allow for determining the so-called first and second fiscal points (the average tax rates relevant to a maximum production effect and to the maximum tax revenues of the budget). The article concludes that it is only the points of the second type of model which correspond to the conception of Laffer since the volume of the usage of economic resources for the points derived from transformational type of model is exogenous whilst the endogenous determination of the volume is made for points of the behavioral type of model. The results are demonstrated by using available data on the US economy.
Keywords
average tax rate, production technology, economic growth, production function with a variable elasticity coefficients, entropy function, potential level of output, Balatski fiscal points, Laffer conception, Laffer fiscal points
Date of publication
01.05.2011
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0
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455
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