On December 12, 2019, Fed in Print will introduce its new platform for discovering content. Please direct your questions to Anna Oates

Home About Latest Browse RSS Advanced Search

Federal Reserve Bank of St. Louis
Working Papers
The Sufficient Statistic Approach: Predicting the Top of the Laffer Curve
Alejandro Badel
Mark Huggett
Abstract

We provide a formula for the tax rate at the top of the Laffer curve as a function of three elasticities. Our formula applies to static models and to steady states of dynamic models. One of the elasticities that enters our formula has been estimated in the elasticity of taxable income literature. We apply standard empirical methods from this literature to data produced by reforming the tax system in a model economy. We find that these standard methods underestimate the relevant elasticity in models with endogenous human capital accumulation.


Download Full text
Cite this item
Alejandro Badel & Mark Huggett, The Sufficient Statistic Approach: Predicting the Top of the Laffer Curve, Federal Reserve Bank of St. Louis, Working Papers 2015-38, 10 Nov 2015.
More from this series
JEL Classification:
Subject headings:
Keywords: Sufficient Statistic; Laffer Curve; Marginal Tax Rate; Elasticity
For corrections, contact Anna Oates ()
Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

Privacy Legal