Revolutionary Tax Model Boosts Public Goods Investment for Economic Growth
The article explores how different types of taxes can be used to promote optimal investment in public goods in an economy with growth. By using a mix of income taxes and flat-rate taxes, the model ensures steady economic growth and efficient allocation of resources. The researchers show that by making the growth rate endogenous, a unique steady state growth rate can be achieved for all key economic variables. They also demonstrate that growth is necessary when public finance provides externalities. The steady state growth rate can be calculated using specific coefficients, simplifying the process of determining optimal tax policies over time.