An endogenous growth model is examined where individuals optimize consumption and tax evasion over time given the tax structure and tax compliance policy of the government. Applying methods of stochastic optimal control, the individual’s problem is solved and the rate of economic growth is derived. It is shown that for a given tax policy tax evasion spurs growth because it leads to higher savin...

In this paper, we examine the effects of various industrial policies on the Korean economy using a dynamic general equilibrium model. We consider industria1 policies such as corporate income tax and subsidy as well as R&D subsidy policy. In the model we classify household sector into 10 income groups and classify production sector into 38 industries. In particular we distinguish the parts and m...

As taxation is one of the key public policy domains influencing population health, and as there is a legal, strategic, and programmatic basis for health impact assessment (HIA) in Finland, we analyzed all 235 government bills on tax legislation over the years 2007–2014 to see whether the health impacts of the tax bills had been assessed. We found that health impacts had been assessed for 13 bil...

Around the world, policymakers are obsessed with the competitiveness of their domestic companies and domestically based multinational corporations (MNCs). Such concerns frequently influence policy, especially tax policy. In this paper, I develop a theory of how taxes affect the international competitiveness of businesses. I then use that theory to evaluate basic tax policy decisions, such as th...

The Complexity of Economic Policy: I. Restricted Local Optima in Tax Policy Design Economists traditionally tackle normative problems by computing optimal policy, i.e. the one that maximizes a social welfare function. In practice, however, a succession of marginal changes to a limited number of policy instruments are implemented, until no further improvement is feasible. I call such an outcome ...

To the extent of my knowledge, this paper is the first attempt to subject relative income under political economy analysis. The paper will introduce a utility function that includes relative income which will drives our models. According to the model, income distribution will coincide with wage distribution under specific assumptions. An intervention in income distribution may help agents to co...

Donald Trump’s election was a significant surprise. The reaction of company stock prices to the election reflects shifts in investor expectations about economic growth, taxes, and trade policy. High-beta stocks outperformed, presumably due to strengthened growth expectations. Expectations of significant corporate tax cuts boosted high-tax firms, but hurt firms with significant net operating los...

Donald Trump’s election was a significant surprise. The reaction of company stock prices to the election reflects shifts in investor expectations about economic growth, taxes, and trade policy. High-beta stocks outperformed, presumably due to strengthened growth expectations. Expectations of significant corporate tax cuts boosted high-tax firms, but hurt firms with significant net operating los...

The export tax rebate (ETR) policy is one of the most frequently used policy instruments by Chinese policy makers. This paper therefore provides a vital analysis of its allocation effects. To motivate our empirical analysis for the allocation effects of the ETR policy, we first add a tax rebate to the Melitz and Ottaviano (2008) model and examine the impact of this policy on firms' markup size ...