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- W26792693 abstract "We examine the impact of scal policy on macroeconomic performance when public goods play a dual role by simultaneously providing both productive and utility services to the private sector. When these services are subject to congestion, a consumption tax is distortionary, generating a dynamic adjustment that contrasts an income tax. The design of optimal scal policy demonstrates the possibilities for using both incomeand consumption-based scal instruments as opposed to relying on the income tax alone. In correcting for congestion, an income tax-consumption subsidy combination is the preferred policy when factor-substitutability in production is limited. On the other hand, an increase in the elasticity of substitution in production raises the e cacy of a consumption tax as an alternative to the income tax. Not internalizing the dual bene ts of public goods might lead to misleading predictions regarding the e ect of public policies on welfare." @default.
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- W26792693 date "2009-01-01" @default.
- W26792693 modified "2023-09-23" @default.
- W26792693 title "Public goods, congestion, and fiscal policy: Do consumption-based instruments matter?" @default.
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