Government Debt, Taxes and Growth
2000 ◽
Vol 18
(2)
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pp. 119-130
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Abstract By using a small discrete-time model we evaluate the impact of distortionary taxation on the government debt-to-GDP ratio. Once the standard model is modified accordingly, it appears that the increase of taxation has a growth cost which increases as long as die debt-to-GDP ratio rises. The empirical implementation uses data drawn from recent Italy’s record and is based on realistic shocks to the relevant parameters. A major finding is the importance of the debt level - not only of the dynamics - to stabilize the debt-to-GDP ratio. A second finding is that sustainable tax rates are remarkably lower than those prevailing in Italy since the 80s.
2007 ◽
Vol 14
(04)
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pp. 379-396
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2011 ◽
pp. 87-110
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2020 ◽
Vol 2020
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pp. 1-11
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