TY  - RPRT
CY  - Toulouse
ID  - publications23201
UR  - http://tse-fr.eu/pub/31553
A1  - Fève, Patrick
A1  - Matheron, Julien
A1  - Sahuc, Jean-Guillaume
Y1  - 2017/03//
N2  - In a neoclassical growth model with incomplete markets and heterogeneous, liquidity-constrained agents, the properties of the Laffer curve depend on whether debt or transfers are adjusted to balance the government budget constraint. The Laffer curve conditional on public debt is horizontally S-shaped. Two opposing forces explain this result. First, when government wealth increases, the fiscal burden declines, calling for lower tax rates. Second, because the interest rate decreases when government wealth increases, fiscal revenues may also decline, calling for higher taxes. For sufficiently negative government debt, the second force dominates, leading to the odd shape of the Laffer curve conditional on debt.
PB  - TSE Working Paper
T3  - TSE Working Paper
KW  - Laffer Curve
KW  - Incomplete Markets
KW  - Labor Supply
KW  - Public Debt
M1  - working_paper
TI  - The Horizontally s-shaped laffer curve
AV  - public
EP  - 56
ER  -