Fiscal policy reforms and dynamic Laffer effects

摘要: This paper looks at the conditions under which a dynamic Laffer effect occurs. Using basic model, we explain and reconcile selected findings in literature. We numerically show that lower tax rate on capital income is best candidate for obtaining effect—here defined as an improvement long-run budget balance of government. Moreover, ignoring stock initial debt changes labor supply lead to overestimation underestimation effect, respectively. Finally, when taxes factor are financed by higher consumption, there exists wide array combinations both government lifetime welfare. These combinations, however, differ their implications immediate welfare effects.