Optimal Provision of Public Inputs in a Second Best Scenarioa Numerical Simulation
Argitaletxea: [s.l: s.n.]
Argitalpen urtea: 2005
Orrialdeak: 54
Biltzarra: Encuentro de Economía Pública (12. 2005. Palma de Mallorca)
Mota: Biltzar ekarpena
Laburpena
This paper studies the optimal provision of public inputs under two different tax settings: with lump-sum taxes and with taxes on labor. After obtaining optimal rules for the provision of public inputs, a numerical simulation is carried out to compute the level of public spending in each scenario. We find that the level of public input provided under a second best scenario is higher than that corresponding to a first best outcome, with a bigger social welfare too.