search query: @indexterm taxation / total: 1872
reference: 465 / 1872
| Author: | Pelloni, A. Waldmann, R. |
| Title: | Can waste improve welfare? |
| Journal: | Journal of Public Economics
2000 : JUL, VOL. 77:1, p. 45-79 |
| Index terms: | Welfare economics Taxation Capital Investment Growth Models |
| Freeterms: | Government subsidies |
| Language: | eng |
| Abstract: | In models with capital spillover, the market outcome is not Pareto efficient since agents ignore the positive externalities caused by investment. One might conclude that taxes on investment or subsidies to consumption will reduce welfare. However, in the model of endogenous growth either a small tax on capital income, whose proceeds are wasted, increases growth and welfare or a small marginal subsidy to consumption increases growth and welfare. Also if the tax on capital income does not increase growth, a lump sum tax whose proceeds are wasted increases growth, and for a wide range of parameter values, increases welfare. |
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