Nick and I argued that Barro's 1979 tax smoothing result is due to his quadratic loss function. We identified what we dubbed a "precautionary taxation" motive when there's a Laffer curve in taxation.
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Ken Judd blogs about my 1995 paper with Nick…
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Nick and I argued that Barro's 1979 tax smoothing result is due to his quadratic loss function. We identified what we dubbed a "precautionary taxation" motive when there's a Laffer curve in taxation.