TY  - JOUR
AU  - Trabandt, Mathias
AU  - Uhlig, Harald
TI  - How Do Laffer Curves Differ Across Countries?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 17862
PY  - 2012
Y2  - February 2012
DO  - 10.3386/w17862
UR  - http://www.nber.org/papers/w17862
L1  - http://www.nber.org/papers/w17862.pdf
N1  - Author contact info:
Mathias Trabandt
Goethe University Frankfurt
Theodor-W.-Adorno-Platz 3  
60323 Frankfurt am Main
Germany
E-Mail: mathias.trabandt@gmail.com

Harald Uhlig
Dept. of Economics
University of Chicago
1126 E 59th Street
Chicago, IL 60637
Tel: 773/702-3702
Fax: 773/702-8490
E-Mail: huhlig@uchicago.edu
M1  - published as Mathias Trabandt, Harald Uhlig. "How Do Laffer Curves Differ across Countries?," in Alberto Alesina and Francesco Giavazzi, editors, "Fiscal Policy after the Financial Crisis" University of Chicago Press (2013)

M3  - presented at "Fiscal Policy after the Financial Crisis", December 12-13, 2011
AB  - We seek to understand how Laffer curves differ across countries in the US and the EU-14, thereby providing insights into fiscal limits for government spending and the service of sovereign debt. As an application, we analyze the consequences for the permanent sustainability of current debt levels, when interest rates are permanently increased e.g. due to default fears. We build on the analysis in Trabandt and Uhlig (2011) and extend it in several ways. To obtain a better fit to the data, we allow for monopolistic competition as well as partial taxation of pure profit income. We update the sample to 2010, thereby including recent increases in government spending and their fiscal consequences. We provide new tax rate data. We conduct an analysis for the pessimistic case that the recent fiscal shifts are permanent. We include a cross-country analysis on consumption taxes as well as a more detailed investigation of the inclusion of human capital considerations for labor taxation.
ER  -