THE LAFFER CURVE AND PRECAUTIONARY TAXATION: A RATIONALE FOR PAYING DOWN THE NATIONAL DEBT*
*Earlier versions of this paper were read at the annual conference of the WEA International, Seattle, WA, July 1991, and the Economics Seminar, Drexel University, Philadelphia, PA, October 1991. We thank two referees from this journal, and Mohamad L. Hammour and Bang Nam Jeon for their valuable help and suggestions. Responsibility for all errors is our own. Parts of this paper were written while Dehejia was a graduate student at Columbia University, and while Rowe was visiting the University of Adelaide.