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The Effect of Deficit Finance on Human Capital

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  • Trostel, Philip A.
Abstract
A study that measures the effects of human capital investment on the deficit financing costs of government spending finds that the lower current and higher future tax rates of deficit financing increases opportunity costs and reduces the benefits of investments.

Suggested Citation

  • Trostel, Philip A., 1995. "The Effect of Deficit Finance on Human Capital," National Tax Journal, National Tax Association;National Tax Journal, vol. 48(4), pages 531-546, December.
    • Handle: RePEc:ntj:journl:v:48:y:1995:i:4:p:531-46
    DOI: 10.1086/NTJ41789169
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    References listed on IDEAS

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    1. Lord, William, 1989. "The transition from payroll to consumption receipts with endogenous human capital," Journal of Public Economics, Elsevier, vol. 38(1), pages 53-73, February.
    2. Browning, Edgar K., 1994. "The non-tax wedge," Journal of Public Economics, Elsevier, vol. 53(3), pages 419-433, March.
    3. Trostel, Philip A, 1993. "The Effect of Taxation on Human Capital," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 327-350, April.
    4. Feldstein, Martin, 1985. "Debt and taxes in the theory of public finance," Journal of Public Economics, Elsevier, vol. 28(2), pages 233-245, November.
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    8. Ballard, Charles L., 1990. "Marginal welfare cost calculations : Differential analysis vs. balanced-budget analysis," Journal of Public Economics, Elsevier, vol. 41(2), pages 263-276, March.
    9. Lucas, Robert E, Jr, 1990. "Supply-Side Economics: An Analytical Review," Oxford Economic Papers, Oxford University Press, vol. 42(2), pages 293-316, April.
    10. John Laitner, 1993. "Long-Run Growth and Human Capital," Canadian Journal of Economics, Canadian Economics Association, vol. 26(4), pages 796-814, November.
    11. Hansson, Ingemar & Stuart, Charles, 1985. "Tax revenue and the marginal cost of public funds in Sweden," Journal of Public Economics, Elsevier, vol. 27(3), pages 331-353, August.
    12. Drazen, Allan, 1978. "Government Debt, Human Capital, and Bequests in a Life-Cycle Model," Journal of Political Economy, University of Chicago Press, vol. 86(3), pages 505-516, June.
    13. Jones, Larry E. & Manuelli, Rodolfo E. & Rossi, Peter E., 1997. "On the Optimal Taxation of Capital Income," Journal of Economic Theory, Elsevier, vol. 73(1), pages 93-117, March.
    14. Trostel, Philip A., 1993. "The nonequivalence between deficits and distortionary taxation," Journal of Monetary Economics, Elsevier, vol. 31(2), pages 207-227, April.
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    Cited by:

    1. Maria Carme Riera i Prunera, 2003. "Deficit, human capital and economic growth dynamics," Working Papers in Economics 102, Universitat de Barcelona. Espai de Recerca en Economia.
    2. Riera Prunera, Maria Carmen, 2000. "A Role For Deficit In Economic Growth," ERSA conference papers ersa00p335, European Regional Science Association.
    3. Samuel O.Okafor & Olisaemeka D. Maduka & Ann N. Ike & Benedict I. Uzoechina, 2017. "Tax-financing of Budget Deficits in LDCs: Re-validation of Laffer Curve Theory," Applied Economics and Finance, Redfame publishing, vol. 4(3), pages 89-101, May.

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