TY  - JOUR
AU  - Leeper,Eric M.
AU  - Yang,Shu-Chun Susan
TI  - Dynamic Scoring: Alternative Financing Schemes
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12103
PY  - 2006
Y2  - March 2006
UR  - http://www.nber.org/papers/w12103
L1  - http://www.nber.org/papers/w12103.pdf
N1  - Author contact info:
Eric M. Leeper
Department of Economics
304 Wylie Hall
Indiana University
Bloomington, IN  47405
Tel: 812/855-9157
Fax: NA
E-Mail: eleeper@indiana.edu

Susan Yang
Joint Committee on Taxation
E-Mail: no email available
M2  - featured in NBER digest on 2006-03-20
AB  - Neoclassical growth models predict that reductions in capital or labor tax rates are expansionary when lump-sum transfers are used to balance the government budget. This paper explores the consequences of bond-financed tax reductions that bring forth a range of possible offsetting policies, including future government consumption, capital tax rates, or labor tax rates. Through the resulting intertemporal distortions, current tax cuts can be contractionary. The paper also finds that more aggressive responses of offsetting policies to debt engender less debt accumulation and less costly tax cuts.
ER  -