Growth Effects of Taxation in an Endogenous Growth Model with Home Production

Abstract

The thesis uses two-sector endogenous growth model to analyze the growth effects and welfare effects of taxations under the scenario that home production is considered. The findings conclude that labor income tax has the largest negative effect on growth rate and welfare with home production; capital income tax second, and consumption tax the least. When comparing the scenario with and without home production, the home production makes the growth effects of taxations less serious, and welfare effects of taxations stronger.