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Sequential equilibria in a Ramsey tax model

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  • Christopher Phelan
  • Ennio Stacchetti

Abstract

This paper presents a full characterization of the equilibrium value set of a Ramsey tax model. More generally, it develops a dynamic programming method for a class of policy games between the government and a continuum of consumers. By selectively incorporating Euler conditions into a strategic dynamic programming framework, we wed two technologies that are usually considered competing alternatives, resulting in a dramatic simplification of the problem.

Suggested Citation

  • Christopher Phelan & Ennio Stacchetti, 1999. "Sequential equilibria in a Ramsey tax model," Staff Report 258, Federal Reserve Bank of Minneapolis.
    • Handle: RePEc:fip:fedmsr:258
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    References listed on IDEAS

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    Keywords

    Macroeconomics; Taxation;

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