The question of how substitution of debt for taxes affects private sector wealth and consumption has long been an unresolved macroeconomic theory and policy dispute. The present study attempts to address this problem within a modified fiscal-illusion setting, by utilizing an explicit rational...

The focus of this paper is twofold. First, it examines the impact on work effort of changes in government purchases financed with lump-sum taxes, in a neoclassical framework, with respect to four industrialised countries. Second, it reconsiders the expenditure-work effort relationship in a...

In a simple macromodel of endogenous growth for 13 OECD countries, the effects of deficit financed tax cuts on output and tax revenue are examined and certain widely assumed properties of the Laffer curve are shown to hold for a portion only of the sample countries. The shape of the Laffer curve...

Advocates of supply-side economics contend that at least some of the economies are on the negatively sloped portion of the well-publicized Laffer curve, so that a lowering of tax rates will increase tax revenue and, thereby, reduce fiscal deficits in the long run. The purpose of this paper is to...

Over the past two decades there has been an increase in the relative size of the public sector, accompanied by a decline in the growth performance of the Greek economy. In an attempt to highlight the contribution of the government size to growth, an analytical framework is developed,...

In this paper, we analyse the dynamic relationship between hours worked per employee (per self-employed) and marginal income tax-rate shocks in terms of both a comparative-dynamics model and a stochastic general equilibrium econometric model. The econometric model is estimated for Germany, UK...

Standard models of tax evasion use a static decision-under-uncertainty setting to determine how an individual’s evasion decision is affected by the fiscal instruments. Most of these models fail to create a framework, within which unique relationships between tax evasion and its main...