【题目】Socially optimal taxation, spending externalities, and endogenous growth in an infinite horizon
Jie Zhang has been a Professor in Department of Economics, National University of Singapore since 2008. He was a professor in University of Queensland from 2006-2008. His research interests are in macroeconomics, public economics, growth theory and health economics. He holds his Ph.D in economics from University of Western Ontario. His publications appear in Journal of Public Economics, Journal of Economic Dynamics and Control, Macroeconomic Dynamics, Canadian Journal of Economics, Journal of Money, Credit and Banking.
We investigate optimal taxation in an endogenous growth model with positional consumption and education spending externalities. Such externalities reinforce their negative effects on investment and education. Internalizing such externalities should tax income and consumption, subsidize investment at the capital-income tax rate, and subsidize education more highly than tax labor income and consumption. Optimal tax-subsidy rates are time-invariant and time-consistent unless government debt exceeds its steady-state ratio to output. Education subsidies or labor-income taxes have ambiguous effects on schooling time. Investment subsidies increase schooling. The result may explain why the U.S. has higher education attainment and productivity than the OECD average.