Optimal Tax Reform and Public-Sector Investment in Human Capital

Standard RBC models fail to account for the business cycle stylized facts when growth results from a random walk in technology. Does this mean that we are to dismiss the evidence in favor of a unit root in output when we have a prior in favor of RBC models? To answer this question, we explore the usefulness of introducing an endogenous source of growth in a standard RBC model. Using a formal measure of Þt, we show that doing so permits both to reproduce some key business cycle facts and to obtain a unit root in output.

show abstract

scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.

Contact Info

customersupport@researchsolutions.com

10624 S. Eastern Ave., Ste. A-614

Henderson, NV 89052, USA

Blog Terms and Conditions API Terms Privacy Policy Contact Cookie Preferences Do Not Sell or Share My Personal Information

Made with 💙 for researchers

Part of the Research Solutions Family.

Optimal Tax Reform and Public-Sector Investment in Human Capital

Cited by 4 publications

References 64 publications

Long-run growth and welfare effects of public policies with distortionary taxation

Long-run growth and welfare effects of public policies with distortionary taxation

Equipment prices, human capital and economic growth

Is growth useful in RBC models?

Contact Info

Product

Resources

About