TY  - JOUR
AU  - Razin,Assaf
AU  - Yuen,Chi-Wa
TI  - Capital Income Taxation and Long Run Growth: New Perspectives
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5028
PY  - 1996
Y2  - April 1996
UR  - http://www.nber.org/papers/w5028
L1  - http://www.nber.org/papers/w5028.pdf
N1  - Author contact info:
Assaf Razin
Department of Economics
Cornell University
Uris 422
Ithaca, NY 14853
Tel: 607/255-9625
Fax: 607/255-2818
E-Mail: ar256@cornell.edu

Chi-wa Yuen
University of Hong Kong
E-Mail: cwyuen@ust.hk
AB  - We study the effects of capital income taxation on long run growth in an endogenous growth framework with two distinguishing features: endogenous population and international capital mobility. Endogenizing population growth introduces a new channel for taxes to affect economic growth and enables us to discriminate the effects of taxes on total versus per capita income growth.  Allowing for capital mobility in the open economy, we show how the effects of taxes on population growth and income growth across countries will vary in specific ways, depending on the international income tax regimes and the relative preference bias of people towards the 'quantity' and 'quality' of children.  The numerical results based on our calibrated model for the G-7 also indicate that, although the effects of liberalizing capital flows on long run growth may not be very sizable, the growth effects of changes in capital income tax rates can be tremendously magnified by cross-border capital flows and cross-border spillovers of policy effects.
ER  -