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Working paper

Tax Smoothing and Expenditure Creep (WP 98/09)

Issue date: 
Tuesday, 1 December 1998
View point: 


Tax smoothing minimises the economic costs of raising taxes to finance a varying profile of expenditure. This standard result assumes that expenditure pressures do not vary with the short term fiscal position. In the presence of expenditure creep, however, tax smoothing is no longer optimal tax policy.

Last updated: 
Wednesday, 24 October 2007