Foundations of Supply-Side Economics

Foundations of Supply-Side Economics: Theory and Evidence is composed of a series of papers containing both theoretical and empirical analyses of a set of issues in government fiscal policy.The type of analysis employed in the book is standard neoclassical economics, and this analysis is used to study the macroeconomic incentive effects of taxation. The book contains contributions that cover the analysis of the effects of taxes imposed purely for generating revenues; the process of capital formation; and an attempt to integrate supply-side analysis into a traditional macroeconomic framework. Reports on the empirical evidence on taxation and economic activity and the estimation of a small macroeconomic model of the United States for the postwar period; description of a method of calculating effective marginal tax rates on factor incomes using available U.S. data; and the estimation of the effect of fiscal policy on private investment in plant and equipment are presented as well.Economists will find the book highly insightful.

¿PrefaceIntroductionChapter 1 Tax Rates, Factor Employment, Market Production, And Welfare 1. The Model 2. Taxation and Market Activity 3. Taxation and Revenue 4. The Tax Structure, Market Output, and Welfare 5. The Empirical Relevance of the Prohibitive Range 6. Some Numerical Examples 7. Conclusion ReferencesChapter 2 Taxation In A Closed Economy Intertemporal Model With A Variable Supply Of Labor To The Market Sector Introduction 1. The Model 2. The Government Sector 3. Long-Run Effects of Taxes 4. A Special Case 5. Welfare Ranking of the Tax Policies 6. Concluding Remarks ReferencesChapter 3 A Neoclassical Model Of Fiscal Policy, Employment, And Capital Accumulation 1. The Model 2. Comparative Statics of the Individual's Maximization Problem 3. Government Fiscal Policies 4. General Equilibrium 5. Summary Appendix A. Evaluation of Changes in h*1+1 Appendix B. Further Assumptions Behind the Theoretical Model and Resulting Implications Concerning the Existence of Bequests Appendix C. Steady-State Effects of Taxation on Factor Employment in a Cobb-Douglas World ReferencesChapter 4 The Revenue Effects Of The Kennedy Tax Cuts 1. A Simple Model 2. Historical Antecedents of the Laffer Curve 3. Existing Empirical Evidence on Tax Rates, Economic Activity, and Tax Revenues 4. Time-Series Estimates 5. Effects on Other Economic Variables 6. Tranfer Function Estimates 7. Conclusions Appendix ReferencesChapter 5 Fiscal Policy And The Labor Market 1. Introduction 2. The Supply of Labor 3. The Demand for Labor 4. Empirical Implementation of the Model 5. Simulation of the Model 6. Summary Appendix ReferencesChapter 6 ¿stimates Of Effective Marginal Tax Rates On Factor Incomes 1. Introduction 2. Some Caveats 3. The Nature of Available Data 4. A Hypothetical Tax Structure 5. Relation of Hypothetical Tax Structure to Available Data 6. Some Remaining Issues 7. Alternative Tax Rate Series 8. Behavior of Tax Rates Over Time 9. Uses of Components of Tax Rates 10. Summary ReferencesChapter 7 Government Fiscal Policy And Private Capital Formation-Some Aggregate Time-Series Estimates 1. Introduction 2. The Hypotheses to Be Tested 3. Methodology 4. Identification, Estimation, and Diagnostic Checks of Transfer Function Models 5. Choice of a Government Spending Variable 6. The Data 7. Univariate Time-Series Models for Exogenous Variables 8. Transfer Function Models for INVS 9. Transfer Function Models for INVE 10. Comparison of Results for INVS and INVE 11. Results for Selected Subperiods 12. Conclusion Appendix ReferencesChapter 8 What Does A Tax Cut Do? 1. Introduction 2. Econometric Specifications of the Model 3. Some Econometric Issues 4. An Empirical Model of the U.S. Economy 5. Discussion of the Estimates 6. Policy Analysis Appendix ReferencesChapter 9 Persistent Growth Rate Differentials Among States In A National Economy With Factor Mobility 1. The Model 2. Some Theoretical and Empirical Caveats 3. Empirical Evidence: The States' Performance 4. Summary and Conclusions Appendix A. Data Sources Appendix B. Derivation of States' Personal Income Appendix C. The States' Performance Relative to Their Region: The Seemingly Unrelated Regression Estimates ReferencesChapter 10 The Missing Equation: The Wedge Model Alternative Introduction 1. The IS-LM Framework 2. A More General Model 3. The IS Curve Revisited 4. The Effects of Government Expenditures 5. The Effects of Nonneutral Taxes 6. Deficit Financing: The Money and Bond Markets 7. Concluding Remarks ReferencesIndex