nep-pub New Economics Papers
on Public Finance
Issue of 2010‒08‒14
two papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Taxation in the Two-Sector Neoclassical Growth Model with Sector-Specific Externalities and Endogenous Labor Supply By Amano, Daisuke; Itaya, Jun-ichi
  2. "Did the 2008 Rebate Fail? A Response to Taylor and Feldstein " By Kenneth A. Lewis; Laurence S. Seidman

  1. By: Amano, Daisuke; Itaya, Jun-ichi
    Abstract: This paper examines the long-run impacts of selective (sector-specific) commodity, payroll and profit taxes in a two-sector endogenous growth model with sector-specific production externalities, in which one sector produces consumption goods and the other produces investment goods. The novelty of the model is that it allows not only for endogenous labor supply (which may lead to indeterminacy) but also for the intersectional allocation of labor. We analytically show that the long-run effects of these selective taxes are closely related to the possible emergence of the indeterminacy of equilibria, which may reverse the standard results of the growth effects of distortionary taxes.
    Keywords: Selective tax, Two-sector model, Endogenous growth, Production externalities, Indeterminacy, Endogenous labor supply,
    JEL: H22 J22 O41
    Date: 2010–06
  2. By: Kenneth A. Lewis (Department of Economics,University of Delaware); Laurence S. Seidman (Department of Economics,University of Delaware)
    Abstract: Did the 2008 rebate fail to stimulate consumer spending? In their recent influential AER articles, John Taylor and Martin Feldstein each claim that BEA aggregate time series data show that the 2008 rebate failed. Re-examining the BEA data, we find that the data instead show there is a high probability that the rebate stimulated consumption. Moreover, the hypothesis that a rebate has half the impact of ordinary disposable income cannot be rejected. Thus, we find that analysis of the BEA aggregate time series data is consistent with the conclusion from the micro-data studies that the 2008 rebate stimulated consumer spending.
    Keywords: fiscal policy, fiscal stimulus, tax rebates
    JEL: E62
    Date: 2010

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