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 |
URL: |
http://d.repec.org/n?u=RePEc:hok:dpaper:225&r=pub |