What does Harberger assume the governments, in the models he studies, spend the revenues from distortionary...

What does Harberger assume the governments, in the models he studies, spend the revenues from distortionary taxes in his models of deadweight loss? Previous researchers would typically assume that governments spend these revenues on public goods which do not directly affect the utility household receive from their consumption. How did this allow Harberger be able to feasibly estimate deadweight losses where previous researchers were not?

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Rahul Sunny answered 1 year ago

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