Subsidies in an R&amp;D growth model with elastic labor

Zeng, Jinli; Zhang, Jie

doi:10.1016/j.jedc.2006.01.006

Cited by 27 publications

(45 citation statements)

References 16 publications

(11 reference statements)

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Moreover, using a simple quality‐ladder‐type growth model, we clarify how the welfare‐maximizing tax rates depend on the strength of patent protection. Based on a simple R&D‐based growth model, as in the present study, Zeng and Zhang () examined how subsidies financed through distortionary taxes affect growth and welfare. However, their focus is on which is most effective in terms of promoting growth and raising welfare: subsidies to final output, purchases of intermediate goods, or R&D. Moreover, their study uses a different model from that in the present analysis.…”

Section: Introductionmentioning

confidence: 99%

Effects of Patent Protection on Optimal Corporate Income and Consumption Taxes in an R&D‐Based Growth Model

Iwaisako

2016

Southern Economic Journal

View full text Add to dashboard Cite

Does reducing the corporate income tax accompanied by an increase in the consumption tax to meet the governments budget constraint improve welfare? To respond, I examine the welfare-maximizing corporate income tax and consumption tax rates in an R&D-based growth model under the constraint that the governments budget is balanced at each point of time. Further, I consider how welfare-maximizing tax rates change as patent protection becomes stronger, as seen in many countries. The results show that as patent protection becomes stronger, the corporate income tax rate should be higher and the consumption tax rate should be lower. This implies that under stronger patent protection, recovering production at the expense of innovation by raising corporate income tax and reducing consumption tax improves welfare.

show abstract

Section: Introductionmentioning

confidence: 99%

Effects of Patent Protection on Optimal Corporate Income and Consumption Taxes in an R&D‐Based Growth Model

Iwaisako

2016

Southern Economic Journal

View full text Add to dashboard Cite

show abstract

“…The benchmark scenario involves the following parameter values. First, as frequently documented in the existing literature including Jones, Manuelli, and Rossi () and Zeng and Zhang (), the inverse of the intertemporal substitution elasticity in consumption and the time preference rate are set as

ρ = 0.05

and

σ = 1.5

, respectively. Second, in‐line with Barro (), the degree of government expenditure externalities in the production function is set as α=0.25, and the income tax rate is set to be equal to the government expenditure share

τ = 0.25

.…”

Section: Welfare Implicationsmentioning

confidence: 99%

Tax Havens, Growth, and Welfare

Chu

Lai

Cheng

2015

Journal of Public Economic Theory

View full text Add to dashboard Cite

This paper develops an endogenous growth model featuring tax havens, and uses it to examine how the existence of tax havens affects the economic growth rate and social welfare in high-tax countries. We show that the presence of tax havens generates two conflicting channels in determining the growth effect. First, the public investment effect states that tax havens may erode tax revenues and in turn decrease the government's infrastructure expenditure, thereby reducing growth. Second, the tax planning effect of tax havens reduces marginal cost of capital and hence encourages capital accumulation so as to spur economic growth. The overall growth effect is ambiguous and is determined by the extent of these two effects. The welfare analysis shows that tax havens are more likely to be welfare-enhancing if the government expenditure share in production is low, or the initial income tax rate is high.Moreover, the welfare-maximizing income tax rate is lower than the growth-maximizing income tax rate if tax havens are present.

show abstract

“…24 The choice for the elasticity of substitution between intermediate goods β is less straightforward. A number of studies relates this elasticity directly to the production elasticity of capital α, resulting in either unrealistic high markups or implausible income shares of production factors when calibrating the model; see Romer (1990), Jones (1995, Zeng and Zhang (2007), and Long and Pelloni (2011). We follow the literature that calibrates the parameters β and α separately (i.e., Jones and Williams, 2000;Grossmann et al, 2010).…”

Section: Calibration and Stylized Factsmentioning

confidence: 99%

“…Our paper is also related to Jones (1995), Jones and Williams (2000), Zeng and Zhang (2007), and Grossmann et al (2010), who calibrate R&D-based models of economic growth but differ substantially in their treatment of the elasticity of labor supply and coverage of fiscal instruments available to the government.…”

Section: Introductionmentioning

confidence: 99%

Dynamic Scoring through Creative Destruction

Oudheusden

2012

SSRN Journal

View full text Add to dashboard Cite

We examine the dynamic feedback effects of fiscal policies on the government budget and economy activity in a calibrated general equilibrium framework featuring endogenous growth through creative destruction. For several European countries, we find that making tax incentives with respect to research effort more generous is the least costly way, in terms of the impact on the government budget, to promote economic growth. It is almost three times as cost effective as lowering the tax rate on capital income. When non-distorting financing options are excluded, adjusting the consumption tax to finance more generous tax incentives for research effort leads to the smallest loss in economic efficiency and the largest welfare gain.

show abstract

Subsidies in an R&D growth model with elastic labor

Cited by 27 publications

References 16 publications

Effects of Patent Protection on Optimal Corporate Income and Consumption Taxes in an R&D‐Based Growth Model

Effects of Patent Protection on Optimal Corporate Income and Consumption Taxes in an R&D‐Based Growth Model

Tax Havens, Growth, and Welfare

Dynamic Scoring through Creative Destruction

Contact Info

Product

Resources

About