Socially Optimal Redistribution and Growth: A Further Warning on the Welfare Significance of Representative Consumers' Preferences
AbstractIn this paper, it is illustrated in a simple balanced growth model with redistributive capital income taxation that it is generally misleading to attribute welfare significance to the preferences of a representative consumer, if lump sum redistribution is unfeasible. This result holds even if a representative agent exists for all endowment distributions, i.e. even if there always exists an endowment distribution such that utility of the representative consumer has welfare significance for any social welfare function. Moreover, it can be concluded from our example that, in general, the net return to capital should be lower than the (social) marginal productivity of capital.
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Bibliographic InfoArticle provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv.
Volume (Year): 57 (2000)
Issue (Month): 2 (March)
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Find related papers by JEL classification:
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- D30 - Microeconomics - - Distribution - - - General
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
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