TY  - JOUR
AU  - Mankiw,N. Gregory
AU  - Weinzierl,Matthew
TI  - Dynamic Scoring: A Back-of-the-Envelope Guide
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11000
PY  - 2004
Y2  - December 2004
UR  - http://www.nber.org/papers/w11000
L1  - http://www.nber.org/papers/w11000.pdf
N1  - Author contact info:
N. Gregory Mankiw
Department of Economics
Littauer 223
Harvard University
Cambridge, MA  02138
Tel: 617/495-4301
Fax: 617/495-7730
E-Mail: ngmankiw@fas.harvard.edu

Matthew C. Weinzierl
Harvard Business School
277 Morgan
Soldiers Field
Boston, MA 02163
Tel: 617/495-6697
Fax: 617/496-5994
E-Mail: mweinzierl@hbs.edu
AB  - This paper uses the neoclassical growth model to examine the extent to which a tax cut pays for itself through higher economic growth. The model yields simple expressions for the steady-state feedback effect of a tax cut. The feedback is surprisingly large: for standard parameter values, half of a capital tax cut is self-financing. The paper considers various generalizations of the basic model, including elastic labor supply departures from infinite horizons, and non-neoclassical production settings. It also examines how the steady-state results are modified when one considers the transition path to the steady state.
ER  -