TY  - JOUR
AU  - Jaimovich,Nir
AU  - Rebelo,Sergio
TI  - Non-linear Effects of Taxation on Growth
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 18473
PY  - 2012
Y2  - October 2012
UR  - http://www.nber.org/papers/w18473
L1  - http://www.nber.org/papers/w18473.pdf
N1  - Author contact info:
Nir Jaimovich
Department of Economics
Duke University
213 Social Services Building
Durham, NC 27708
Tel: 919/660-1864
E-Mail: njaimo@gmail.com

Sergio Rebelo
Northwestern University
Kellogg School of Management
Department of Finance
Leverone Hall
Evanston, IL  60208-2001
Tel: 847/467-2329
Fax: 847/491-5719
E-Mail: s-rebelo@northwestern.edu
AB  - We study a model in which the effects of taxation on growth are highly non-linear. Marginal increases in tax rates have a small growth impact when tax rates are low or moderate. When tax rates are high, further tax hikes have a large, negative impact on growth performance. We argue that this non-linearity is consistent with the empirical evidence on the effect of taxation and other disincentives to investment and innovation on economic growth.
ER  -