Advanced Search
MyIDEAS: Login to save this paper or follow this series

The Distributional Consequences of Tax Reforms under Market Distortions

Contents:

Author Info

  • Konstantinos Angelopoulos
  • Wei Jiang
  • Jim Malley

Abstract

In this paper we examine the importance of imperfect competition in product and labour markets in determining the long-run welfare effects of tax reforms assuming agent heterogeneity in capital holdings. Each of these market failures, independently, results in welfare losses for at least a segment of the population, after a capital tax cut and a concurrent labour tax increase. However, when combined in a realistic calibration to the UK economy, they imply that a capital tax cut will be Pareto improving in the long run. Consistent with the theory of second-best, the two distortions in this context work to correct the negative distributional effects of a capital tax cut that each one, on its own, creates.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2011/wp-cesifo-2011-09/cesifo1_wp3600.pdf
Download Restriction: no

Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3600.

as in new window
Length:
Date of creation: 2011
Date of revision:
Handle: RePEc:ces:ceswps:_3600

Contact details of provider:
Postal: Poschingerstrasse 5, 81679 Munich
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Email:
Web page: http://www.cesifo.de
More information through EDIRC

Related research

Keywords: market imperfections; heterogeneous agents; unemployment; tax reform;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Jang-Ting Guo & Kevin J. Lansing, 1998. "Optimal taxation of capital income with imperfectly competitive product markets," Working Papers in Applied Economic Theory, Federal Reserve Bank of San Francisco 98-04, Federal Reserve Bank of San Francisco.
  2. Ardagna, Silvia, 2007. "Fiscal Policy in Unionized Labor Markets," Scholarly Articles 2580048, Harvard University Department of Economics.
  3. Juan Carlos Conesa & Sagiri Kitao & Dirk Krueger, 2007. "Taxing Capital? Not a Bad Idea After All!," NBER Working Papers 12880, National Bureau of Economic Research, Inc.
  4. Konstantinos Angelopoulos & James Malley & Apostolis Philippopoulos, 2011. "Time-consistent fiscal policy under heterogeneity: Conflicting or common interests?," Working Papers, Business School - Economics, University of Glasgow 2011_06, Business School - Economics, University of Glasgow.
  5. Francesco Daveri & Marco Maffezzoli, . "A numerical approach to fiscal policy, unemployment and growth in Europe," Working Papers 155, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  6. Konstantinos Angelopoulos & Bernardo X. Fernandez & James Malley, 2010. "The distributional consequences of supply-side reforms in general equilibrium," Working Papers, Business School - Economics, University of Glasgow 2010_26, Business School - Economics, University of Glasgow, revised Jun 2012.
  7. Teresa Garcia-Milà & Albert Marcet & Eva Ventura, 2010. "Supply Side Interventions and Redistribution," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 120(543), pages 105-130, 03.
  8. Jess Benhabib & Roger E.A. Farmer, 1992. "Indeterminacy and Increasing Returns," UCLA Economics Working Papers, UCLA Department of Economics 646, UCLA Department of Economics.
  9. Lansing, Kevin J., 1999. "Optimal redistributive capital taxation in a neoclassical growth model," Journal of Public Economics, Elsevier, Elsevier, vol. 73(3), pages 423-453, September.
  10. Leith, Campbell & Malley, Jim, 2005. "Estimated general equilibrium models for the evaluation of monetary policy in the US and Europe," European Economic Review, Elsevier, Elsevier, vol. 49(8), pages 2137-2159, November.
  11. David Domeij & Jonathan Heathcote, 2004. "On The Distributional Effects Of Reducing Capital Taxes," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(2), pages 523-554, 05.
  12. Angelopoulos, Konstantinos & Fernandez, Bernardo X. & Malley, James R., 2010. "The Distributional Consequences of Supply-Side Reforms in General Equilibrium," SIRE Discussion Papers, Scottish Institute for Research in Economics (SIRE) 2010-85, Scottish Institute for Research in Economics (SIRE).
  13. Angelopoulos, Konstantinos & Malley, James & Philippopoulos, Apostolis, 2011. "Time-consistent fiscal policy under heterogeneity: Conflicting or common interests?," SIRE Discussion Papers, Scottish Institute for Research in Economics (SIRE) 2011-41, Scottish Institute for Research in Economics (SIRE).
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Konstantinos, Angelopoulos & James, Malley & Apostolis, Philippopoulos, 2013. "Human capital, social mobility and the skill premium," SIRE Discussion Papers, Scottish Institute for Research in Economics (SIRE) 2013-55, Scottish Institute for Research in Economics (SIRE).
  2. Konstantinos Angelopoulos & Stylianos Asimakopoulos & James Malley, 2013. "The optimal distribution of the tax burden over the business cycle," Working Papers, Business School - Economics, University of Glasgow 2013_16, Business School - Economics, University of Glasgow.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_3600. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.