Public capital, endogenous growth, and tax concession on savings

Article Type

Research Article

Publication Title

Indian Economic Review

Abstract

An endogenous growth model is developed where, on one hand income tax revenue is utilized to finance investment on public capital, and on the other hand tax concession is given on savings. If one of the two instruments—proportional income tax rate and proportional tax-concession rate on savings—is used as the policy variable to maximize the balanced growth rate while the other is treated as a parameter, an exogenous increase in the value of the parameter raises the optimum value of the policy variable and generates a positive effect on endogenous growth rate as well as on the rate of savings in the steady-state equilibrium.

First Page

199

Last Page

223

DOI

10.1007/s41775-020-00099-x

Publication Date

12-1-2020

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