Generational Policy and the Macroeconomic Measurement of Tax Incidence
AbstractIn this paper we show that the generational accounting framework used in macroeconomics to measure tax incidence can, in some cases, yield inaccurate measurements of the tax burden across age cohorts. This result is very important for policy evaluation, because it shows that the selection of tax policies designed to change generational imbalances could be misleading. We illustrate this problem in the context of a Social Security reform where we show how fiscal policy can affect the intergenerational gap across cohorts without impacting the distribution of welfare. We provide a more accurate procedure that only measures changes in generational imbalances derived from policies with real effects.
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Bibliographic InfoPaper provided by Barcelona Graduate School of Economics in its series Working Papers with number 373.
Date of creation: Dec 2008
Date of revision:
Generational Accounting; Ramsey Taxation;
Other versions of this item:
- Juan Carlos Conesa & Carlos Garriga, 2009. "Generational policy and the macroeconomic measurement of tax incidence," Working Papers 2009-003, Federal Reserve Bank of St. Louis.
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
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in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 27, pages 1873-1932
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