Skip to Main Content

Economic Quarterly

Winter 1994

Two Perspectives on Growth and Taxes

Peter N. Ireland

Two growth models provide very different perspectives on the link between tax rates and macroeconomic performance. A model developed by Robert Solow predicts that changes in taxes affect the level, but not the growth rate, of aggregate output. A model that draws on the ideas of Frank Knight suggests, in contrast, that tax policy does help determine an economy’s long-run growth rate.

Subscribe to Economic Quarterly

Receive an email notification when Economic Quarterly is posted online:

Subscribe to Economic Quarterly

By submitting this form you agree to the Bank's Terms & Conditions and Privacy Notice.

Phone Icon Contact Us

Lisa Davis (804) 697-8179