Scandinavian Working Papers in Economics
Working Paper Series,
IFAU - Institute for Evaluation of Labour Market and Education Policy
No 2023:14: The marginal cost of public funds: A brief guide
Spencer Bastani ()
Additional contact information
Spencer Bastani: Research Institute of Industrial Economics (IFN); Uppsala Center for Fiscal Studies (UCFS), Uppsala Center for Labor Studies (UCLS), CESIfo, Germany, Postal: Institute for Evaluation of Labour Market and Education Policy, P O Box 513, SE-751 20 Uppsala, Sweden
Abstract: When deciding on the social desirability of public investment, the cost of a project is sometimes adjusted by a factor known as the Marginal Cost of Public Funds (MCP F ), which captures the cost of raising public funds through distortionary taxation. However, there is no scholarly consensus on its definition or quantification. The purpose of this paper is to provide a brief up-to-date guide to the theoretical background, practical application, and empirical quantification of the MCP F, taking into account some recent developments in the public finance literature, and highlighting the broad applicability of the MCP F beyond taxation.
Keywords: benefit-cost analysis; marginal value of public funds; excess burden; distortions; public goods; taxes
Language: English
37 pages, May 23, 2023
Full text files
https://www.ifau.se/...funds-a-brief-guide/Full text
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