In kind versus cash transfers: the nature of public expenditure and the impact on Laffer curve

• Grant number: 10/10522-6
• Support Opportunities: Scholarships abroad - Research
• Start date: January 06, 2011
• End date: July 05, 2011
• Field of knowledge: Applied Social Sciences - Economics - Fiscal and Monetary Policies
• Principal Investigator: Enlinson Henrique Carvalho de Mattos
• Grantee: Enlinson Henrique Carvalho de Mattos
• Host Investigator: Werner Baer
• Host Institution: Escola de Economia de São Paulo (EESP). Fundação Getúlio Vargas (FGV). São Paulo , SP, Brazil
• Institution abroad: University of Illinois at Urbana-Champaign, United States

Abstract

This project aims to characterize the Laffer curve allowing the government to provide in kind and cash transfers. In particular, the paper attempts to prove that the government tax collection only decreases with tax rates raises depending upon the nature of government expenditures: cash or in-kind transfers. Gahvari (1989) shows that a sufficient condition for that is to have cash transfers exclusively. We aim to show that the necessary condition may be a bundle of cash and in kind transfers such tat in kind transfers is below the optimum level. (AU)