NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Taxation and Endogenous Growth in Open Economies

Nouriel Roubini, Gian Maria Milesi-Ferrett

NBER Working Paper No. 4881
Issued in October 1994
NBER Program(s):   IFM   PE

This paper examines the effects of taxation of human capital, physical capital and foreign assets in a multi-sector model of endogenous growth. It is shown that in general the growth rate is reduced by taxes on capital and labor (human capital) income. When the government faces no borrowing constraints and is able to commit to a given set of present and future taxes, it is shown that the optimal tax plan involves high taxation of both capital and labor in the short run. This allows the government to accumulate sufficient assets to finance spending without any recourse to distortionary taxation in the long run. When restrictions to government borrowing and lending are imposed, the model implies that human and physical capital should be taxed similarly.

download in pdf format
   (482 K)

email paper

This paper is available as PDF (482 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Published: Published as "Liquidity Models in Open Economies: Theory and Empirical Evidence", European Economic Review, Vol. 40, nos. 3-5 (1996): 847-859.

Users who downloaded this paper also downloaded these:
Lindsey w2069 Individual Taxpayer Response to Tax Cuts 1982-1984 with Implications forthe Revenue Maximizing Tax Rate
Hool and Richardson w0571 International Trade, Indebtedness, and Welfare Repercussions among Supply-Constrained Economies under Floating Exchange Rates
Grossman and Helpman w4926 Technology and Trade
Engen and Skinner w5826 Taxation and Economic Growth
Roubini and Milesi Ferretti w4882 Optimal Taxation of Human and Physical Capital in Endogenous Capital Models
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us