Taxation and Laffer effects on employment and growth
Some dangerous short- and long-termambiguities of fiscal policies arise from
the belief that Laffer effects may be generated from deficit-financed tax cuts able to
stimulate aggregate demand. However, even in a supply-side framework, fiscal illusion
prevents a rational perception of the effectiveness of Laffer-oriented fiscal measures.
The ambiguity of the Laffer effect led to an important series of studies of Francesco
Forte, designed to disclose and empirically test its interactions with short- and long-term
fiscal policies on gross domestic product (GDP) growth and on other relevant macroeconomic
variables.We discuss, under the Laffer perspective, some of Francesco Forte’s
studies related to fiscal policy effects on the labour market and GDP growth.