Dynamic Scoring: Alternative Financing Schemes / Eric M. Leeper, Shu-Chun Susan Yang.

Format:

Book

Author/Creator:

Leeper, Eric M.

Contributor:

National Bureau of Economic Research.

Yang, Shu-Chun Susan.

Series:

Working Paper Series (National Bureau of Economic Research) no. w12103.

NBER working paper series no. w12103

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Dynamic Scoring

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2006.

Summary:

Neoclassical growth models predict that reductions in capital or labor tax rates are expansionary when lump-sum transfers are used to balance the government budget. This paper explores the consequences of bond-financed tax reductions that bring forth a range of possible offsetting policies, including future government consumption, capital tax rates, or labor tax rates. Through the resulting intertemporal distortions, current tax cuts can be contractionary. The paper also finds that more aggressive responses of offsetting policies to debt engender less debt accumulation and less costly tax cuts.

Notes:

Print version record

March 2006.