Income tax, property tax, and tariff in a small open economy

Research output: Journal Publications and ReviewsRGC 21 - Publication in refereed journalpeer-review

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Original languageEnglish
Pages (from-to)541-554
Journal / PublicationReview of International Economics
Issue number3
Publication statusPublished - Aug 1999
Externally publishedYes


Why do some countries enjoy high economic growth rates while some suffer in 'low-growth traps'? Why are tax policies in different countries so different? Some suggest that it is exactly these differences in government policies which contribute to the difference in economic growth rates. This paper considers a small open economy which sustains its economic growth by adopting new technologies. When the value of initial wealth is 'relatively small', policies which promote growth most result in the highest welfare. In other cases, policies that discourage growth most may be welfare-maximizing.