search query: @indexterm taxation / total: 1872
reference: 215 / 1872
| Author: | Linnemann, L. |
| Title: | Tax base and crowding-in effects of balanced budget fiscal policy |
| Journal: | Scandinavian Journal of Economics
2004 : VOL. 106:2, p. 273-297 |
| Index terms: | Fiscal policy Monopoly Price determination Taxation |
| Language: | eng |
| Abstract: | This paper constructs a dynamic general equilibrium business cycle model with staggered price adjustment, monopolistic wage setting and distortionary taxation. The government purchases goods, runs an unemployment benefit system and balances its budget through a proportional tax on labour income. A temporary tax-financed increase in government expenditures can lower the tax rate through a demand-induced widening of the tax base. It is analytically shown that this allows private consumption to rise, under realistic conditions, despite the negative wealth effect of increased fiscal spending. |
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