Template-type: ReDIF-Paper 1.0
Author-Name: Gustavo A. Marrero
Author-Email: gustavom@ccee.ucm.es
Author-Person: pma419 
Author-Workplace-Name: Departamento de Economía Cuantitativa and ICAE, Universidad Complutense, Somosaguas, 28223 Madrid, Spain. 
Author-Workplace-Homepage: https://www.ucm.es/icae
Author-Workplace-Homepage: https://www.ucm.es/fundamentos-analisis-economico2
Author-Name: Alfonso Novales
Author-Email: anovales@ccee.ucm.es
Author-Homepage: https://www.ucm.es/fundamentos-analisis-economico2/novales-cinca,-alfonso
Author-Person: pno7
Author-Workplace-Name: Departamento de Economía Cuantitativa. Universidad Complutense de Madrid
Author-Workplace-Homepage: https://www.ucm.es/fundamentos-analisis-economico2
Title: Taxing or subsidizing Factors' rents in a simple endogenous growth model with public capital 
Abstract: This paper tackles the fundamental issue in public finance of wether taxing or subsidizing factor 
	rents. In a one sector endogenous growth model with private and public capital, similar to that in 
	Barro (1990),we find that raising taxes on factors’ income as part of an optimal fiscal policy is 
	a more pervasive result than it seems. The interaction of technological and fiscal externalities 
	is central for this result. For instance, high enough levels of wasteful expenditures to output 
	ratio could make positive income taxes enhance welfare. This ratio would need to be smaller, the 
	lower 	the spillover externality and/or the larger the elasticities of private and public capital 
	in the private production function.
Classification-JEL: E0, E6, O4
Keywords: Endogenous growth, Factors’ rents subsidy, Distorting taxes, Public capital.
Length: 31 pages
Creation-Date: 2003 
X-File-Ref: http://america.sim.ucm.es/repec/ucm/ref/doicae0303.txt
File-URL: https://eprints.ucm.es/id/eprint/7702/1/0303.pdf
File-Format: Application/pdf
Handle: RePEc:ucm:doicae:0303