Part of the book series:Economic Policy Conference Series ((EPCS,volume 1))
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Abstract
The first part of the paper by Canto, Joines, and Laffer, which is the only part I will discuss, sets up a simple general equilibrium model with two factors (both taxed proportionately) and one output, and proceeds to grind out the solutions. The model, while not entirely unobjectionable, is certainly not outlandish in any important respect. The authors make no claims that the model tells us anything about the U.S. economy; nor do they draw any policy conclusions. They use the model to provide intellectual underpinnings for the celebrated “Laffer Curve”—the notion that the function relating tax receipts to tax rates rises to a peak and then falls.
. . .the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else.
—J. M. Keynes
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Atkinson, A.B. and N.H. Stern. “Taxation and Incentives in the U.K.: A Comment.”Lloyds Bank Review, April 1980.
Canto, V.A., D.H. Joines, and R.I. Webb. “Empirical Evidence of the Effects of Tax Rates on Economic Activity.” mimeo, University of Southern California, September 1979.
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Authors and Affiliations
National Bureau of Economic Research, Princeton University, Cambridge, Mass., USA
Alan S. Blinder (Professor of Economics and Research Associate)
- Alan S. Blinder
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Editors and Affiliations
Washington University, USA
Laurence H. Meyer
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© 1981 Center for the Study of American Business
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Blinder, A.S. (1981). Thoughts on the Laffer Curve. In: Meyer, L.H. (eds) The Supply-Side Effects of Economic Policy. Economic Policy Conference Series, vol 1. Springer, Dordrecht. https://doi.org/10.1007/978-94-009-8174-4_3
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Keywords
- Home Sector
- Interest Elasticity
- Simple General Equilibrium Model
- Intellectual Underpinning
- Optimal Taxation Framework
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.