International Advances in Economic Research

, Volume 23, Issue 1, pp 1–7 | Cite as

Taxation and Laffer Effects on Employment and Growth

Article
  • 155 Downloads

Abstract

Some dangerous short- and long-term ambiguities of fiscal policies arise from the belief that Laffer effects may be generated from deficit-financed tax cuts able to stimulate aggregate demand. However, even in a supply-side framework, fiscal illusion prevents a rational perception of the effectiveness of Laffer-oriented fiscal measures. The ambiguity of the Laffer effect led to an important series of studies of Francesco Forte, designed to disclose and empirically test its interactions with short- and long-term fiscal policies on gross domestic product (GDP) growth and on other relevant macroeconomic variables. We discuss, under the Laffer perspective, some of Francesco Forte’s studies related to fiscal policy effects on the labour market and GDP growth.

Keywords

Laffer effect Fiscal illusion Fiscal policy Tax-cut Growth Employment 

JEL Classifications

D70 E62 

Notes

Acknowledgments

I wish to aknowldge Gordon Brady who organised the Lisbon session in honour of Francesco Forte and Katherine Virgo for the wonderful, as usual, organization of the whole conference. A particular thank you goes to Francesco Forte, who transformed me into an economist. I will always be indebted to him.

References

  1. Brennan, G., & Buchanan, J. M. (1980). The power to tax: analytical foundations of a fiscal constitution. Cambridge: Cambrige University Press.Google Scholar
  2. Fedeli, S., & Forte, F. (2008). Deregolamentazione del mercato del lavoro ed effetto Laffer: evidenza empirica dall’Italia (1997–2001). Economia Internazionale/International Economics, LXI, 313–338.Google Scholar
  3. Fedeli, S., & Forte, F. (2009). The Laffer effects of a program of deregulation cum detaxation: the Italian reform of labour contracts in the period 1997-2001. European Journal of Law and Economics, 27, 211–232.CrossRefGoogle Scholar
  4. Fedeli, S., & Forte, F. (2012). Public debt and unemployment growth: the need for fiscal and monetary rules. Evidence from OECD countries (1980–2009). Economia Politica, XXIX(3), 399–427.Google Scholar
  5. Fedeli S. and Forte F. (2013), The sociological theory of fiscal illusion and the Laffer curve. Reflections on an Italian case. In Backhaus, Jürgen (ed.), Essentials of fiscal sociology, Series: Finanzsoziologie, Vol 5, Peterlang, pp. 95113.Google Scholar
  6. Fedeli, S., & Forte, F. (2014). Deficits, tax burden and unemployment. In F. Forte, R. Mudambi, & P. Navarra (Eds.), Handbook of alternative theories of public economics. UK: Edward Elgar.Google Scholar
  7. Fedeli, S., & Forte, F. (2016). The long term effects of government budget constraints on GDP growth: an empirical study on OECD countries (1980-2009). In G. Di Bartolomeo, & E. Saltari (Eds.), Theoretical foundations of macroeconomic policy – growth, productivity and public finance. NY: Routledge.Google Scholar
  8. Fedeli S., Forte F., and Zangari E. (2008). An econometric analysis of the employment and revenue effects of the Treu reform in the period 1997-2001. Rivista di politica economica, 215–248.Google Scholar
  9. Fedeli, S., Forte, F., & Ricchi, O. (2014). The long term negative relation between public deficit and structural unemployment: an empirical study of OECD countries (1980-2009). Atlantic Economic Journal, 43(1), 39–54.Google Scholar
  10. Forte, F. (1987). The Laffer curve and the theory of the fiscal bureaucracy. Public Choice, 52(2), 101–124.CrossRefGoogle Scholar
  11. Forte, F. (2008). On the ethics of the Laffer curve. In F. Forte (Ed.), Money, markets And morals (pp. 75–84). Acedo: Munchen.Google Scholar
  12. Forte F. (2018), Laffer effect In Jürgen Backhaus (ed.) Encyclopedia of law and economics, Springer, forthcoming.Google Scholar
  13. Forte, F., Bondonio, P. V., & Jona, L. (1980). Il Sistema Tributario. Boringhieri: Torino.Google Scholar
  14. Laffer A. (2004), The Laffer curve. Past, Present and Future, Heritage, Foundation.Google Scholar
  15. Monissen H. G. (1999), Explorations of the Laffer curve, Würzburg Economic Papers 99–09.Google Scholar
  16. Puviani, A. (1903), Teoria dell’illusione finanziaria, Palermo, Sandron. New Italian edition (1973) with an “Introduction” by F. Volpi, Isedi, Milano.Google Scholar
  17. Wanniski, J. (1978). Taxes, revenues, and the Laffer curve. The Public Interest, 50(Spring), 3–16.Google Scholar

Copyright information

© International Atlantic Economic Society 2016

Authors and Affiliations

  1. 1.Department of Economics and LawSapienza – University of RomeRomeItaly

Personalised recommendations