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This paper reviews the literature providing quantitative and empirical results on capital taxation. In doing this, we differentiate between individual and corporate taxes, respectively. From existing literature, it emerges that capital income taxes for individuals increase with the degree of heterogeneity within the population, market competition, and the economy's maturity, being negative (i.e., subsidy) in the presence of monopolistic competition or developing countries, no higher than 15% in Mirrleesian economies and as high as 45% when coupled with incomplete insurance markets and labor income taxes in competitive‐closed economies. Excessively high wealth tax rates for redistributive purposes, however, are prevented by the larger tax elasticity of rich (−1.15) with respect to poor (−0.09) individuals. Negative tax elasticities concerning employment (from −0.5 to −0.2), innovation (from −2.8 to −1.3), and investments (−4.7) suggest low corporate taxes, whose magnitude should be negatively related to the degree of the economy's openness, given also the possibility for firms to relocate abroad. Finally, although still inconclusive, the main conclusions concerning dividend taxes suggest that tax rates increase with the firm's size and, thus, be set at low levels for start‐ups. [ABSTRACT FROM AUTHOR]

This paper re-examines the origins of the Life-Cycle Hypothesis (LCH) originally formulated by Modigliani and Brumberg seventy years ago, using a combination of historical and archival analysis. The study compares Modigliani's own account of the LCH with a range of other sources, including papers presented at the Conference on Savings in 1952, contemporary literature, and PhD dissertations of Hamburger and Brumberg. The analysis reveals that the idea of the LCH was somehow "in the air" in the early 1950s, although Modigliani-Brumberg's formulation represents an ingenious theoretically-founded and empirically-testable formalisation of such a framework. [ABSTRACT FROM AUTHOR]

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jmacro.2004.07.005 Byline: Luciano Fanti, Luca Spataro Keywords: Overlapping generations; Endogenous labor supply; Dynamic inefficiency; Debt Abstract: In this paper we show that, when elastic labor supply is considered via Cobb Douglas preferences, dynamic inefficiency of OLG economies, while being still a necessary condition, is no longer sufficient for an internal public debt increase to be welfare improving in the long run. This is due to the fact that the equilibrium interest rate can move in the 'wrong' direction if individuals' labor supply is sufficiently elastic. Consequently, raising the level of debt when the economy is experiencing dynamic inefficiency could even be welfare-worsening, in contrast with [Diamond, P., 1965. National debt in a neoclassical growth model. American Economic Review 41, 1126-1150]. Author Affiliation: Dipartimento di Scienze Economiche, Facolta di Economia, Universita degli Studi di Pisa, via C. Ridolfi 10, 56124 Pisa, Italy Article History: Received 11 September 2003; Accepted 23 July 2004