The Dynamic Macroeconomic Effects of Tax Policy in an Overlapping Generations Model
AbstractThe paper studies the dynamic allocation effects of tax policy within the context of an overlapping-generations model of the Blanchard-Yaari type. The model is extended to allow for endogenous labour supply and three tax instruments, viz. a capital tax, labour income tax, and consumption tax. Both analytical expressions and simple diagrams are used to analyze the impact, transition, and long-run effects of tax policy changes. It is shown that a part of the long-run incidence of capital and consumption taxes falls on capital when households' horizons are finite whereas labour would fully bear the burden of these taxes in an infinite-horizon model. Copyright 2000 by Oxford University Press.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 98/182.
Date of creation: 01 Dec 1998
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- Heijdra, Ben J & Ligthart, Jenny E, 2000. "The Dynamic Macroeconomic Effects of Tax Policy in an Overlapping Generations Model," Oxford Economic Papers, Oxford University Press, vol. 52(4), pages 677-701, October.
- Ligthart, J.E. & Heijdra, B.J., 2000. "The dynamic macroeconomic effects of tax policy in an overlapping generations model," Open Access publications from Tilburg University urn:nbn:nl:ui:12-141315, Tilburg University.
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