Working Paper: NBER ID: w0964
Authors: Laurence J. Kotlikoff
Abstract: This paper discusses conceptual problems of distinguishing "expenditure" policy from "tax" policy and "deficit" policy. The paper argues that each of these concepts is ill-defined and does not provide a useful basis for examining the government" underlying fiscal policies. The fundamentals of fiscal policy involve changes in marginal incentives, inframarginal intra- and intergenerational redistribution, and direct government consumption. The paper reviews some of the effects of these fundamental policy choices on economic growth.
Keywords: government expenditures; tax policy; deficit policy; economic growth; intergenerational redistribution
JEL Codes: H50; E62
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| government consumption (E20) | tax receipts net of transfer payments (H29) |
| tax receipts net of transfer payments (H29) | economic growth (O49) |
| government consumption (E20) | economic growth (O49) |
| government transfer payments (H53) | taxation (H20) |
| government consumption (E20) | capital formation (E22) |
| intragenerational redistribution (H23) | capital formation (E22) |
| demographic factors (J11) | labor supply decisions (J22) |
| government consumption (E20) | financing method (G32) |
| financing method (G32) | economic outcomes (F61) |