Resumen de Optimal Provision of Public Inputs in a Second Best Scenario: a Numerical Simulation
Diego Martínez López, Antonio Jesús Sánchez Fuentes
This paper studies the optimal provision of public inputs under two different tax settings: with lump-sum taxes and with taxes on labor.
After obtaining optimal rules for the provision of public inputs, a numerical simulation is carried out to compute the level of public spending in each scenario. We find that the level of public input provided under a second best scenario is higher than that corresponding to a first best outcome, with a bigger social welfare too.
