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National Savings, Economic Welfare, and the Structure of Taxation

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Author Info
Alan J. Auerbach
Laurence J. Kotlikoff

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Abstract

This paper develops a perfect foresight general equilibrium simulation model of life cycle savings that may be used to investigate the potential impact of a wide range of government policies on national savings and economic welfare. The model can provide quantitative answers to a number of long-standing questions concerning the government's influence on capital formation. These include the degree of crowding out of private investment by debt financed increases in government expenditure, the differential effect on consumption of temporary versus more permanent tax cuts, the announcement effects of future changes in tax and expenditure policy, and the response to structural changes in the tax system, including both the choice of the tax base and the degree of progressivity. The model tracks the values of all economic variables along the transition path from the initial steady state growth path to the new steady state growth path. Hence, it can be used to compute the exact welfare gains or losses for each age cohort associated with tax reform proposals.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0729.

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Date of creation: Oct 1983
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Publication status: published relationship to a non-chapter. This should not happen. Please contact NBER.
Handle: RePEc:nbr:nberwo:0729

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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.:
  1. Laurence J. Kotlikoff & Lawrence H. Summers, 1981. "The Role of Intergenerational Transfers in Aggregate Capital Accumulation," NBER Working Papers 0445, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Kotlikoff, Laurence J, 1979. "Social Security and Equilibrium Capital Intensity," The Quarterly Journal of Economics, MIT Press, vol. 93(2), pages 233-53, May. [Downloadable!] (restricted)
  3. Boskin, Michael J, 1978. "Taxation, Saving, and the Rate of Interest," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages S3-27, April. [Downloadable!] (restricted)
  4. Auerbach, Alan J, 1979. "The Optimal Taxation of Heterogeneous Capital," The Quarterly Journal of Economics, MIT Press, vol. 93(4), pages 589-612, November. [Downloadable!] (restricted)
  5. Green, Jerry R. & Sheshinski, Eytan, 1979. "Approximating the efficiency gain of tax reforms," Journal of Public Economics, Elsevier, vol. 11(2), pages 179-195, March. [Downloadable!] (restricted)
  6. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec.. [Downloadable!] (restricted)
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(explanations, 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.)

  1. David G. Hartman, 1985. "On the Optimal Taxation of Capital Income in the Open Economy," NBER Working Papers 1550, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Louis Kaplow, 2006. "Capital Levies and Transition to a Consumption Tax," NBER Working Papers 12259, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Roger Gordon & Martin Dietz, 2006. "Dividends and Taxes," NBER Working Papers 12292, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Roger H. Gordon & Soren Bo Nielsen, 1996. "Tax Avoidance and Value-Added vs. Income Taxation in an Open Economy," NBER Working Papers 5527, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Alan S. Blinder, 1983. "Issues in the Coordination of Monetary and Fiscal Policy," NBER Working Papers 0982, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Fischer Black, 1981. "When Is a Positive Income Tax Optimal?," NBER Working Papers 0631, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. R. Glenn Hubbard, 1984. "'Precautionary' Saving Revisited: Social Security, Individual Welfare, and the Capital Stock," NBER Working Papers 1430, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Laurence J. Kotlikoff & Lawrence H. Summers, 1988. "Tax Incidence," NBER Working Papers 1864, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
    • Kotlikoff, Laurence J. & Summers, Lawrence H., 1987. "Tax incidence," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 2, chapter 16, pages 1043-1092 Elsevier. [Downloadable!] (restricted)
  9. Jacob A. Frenkel & Assaf Razin, 1989. "International Effects of Tax Reforms," NBER Working Papers 2873, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  10. Don Fullerton & Yolanda K. Henderson & John B. Shoven, 1984. "A Comparison of Methodologies in Empirical General Equilibrium Models ofTaxation," NBER Working Papers 0911, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. David F. Bradford, 1996. "Consumption Taxes: Some Fundamental Transition Issues," NBER Working Papers 5290, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  12. Alan J. Auerbach & Laurence J. Kotlikoff & Jonathan Skinner, 1983. "The Efficiency Gains from Dynamic Tax Reform," NBER Working Papers 0819, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  13. Alan J. Auerbach & Laurence J. Kotlikoff, 1984. "An Examination of Empirical Tests of Social Security and Savings," NBER Working Papers 0730, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  14. Akira Okamoto, 2005. "Simulating fundamental tax reforms in an aging Japan," Economic Systems Research, Taylor and Francis Journals, vol. 17(2), pages 163-185, June. [Downloadable!] (restricted)
  15. Michael J. Boskin & Laurence J. Kotlikoff, 1986. "Pubic Debt and U.S. Saving: A New Test of the Neutrality Hypothesis," NBER Working Papers 1646, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  16. Alan J. Auerbach & Laurence J. Kotlikoff, 1985. "Simulating Alternative Social Security Responses to the Demographic Transition," NBER Working Papers 1308, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  17. Berthold Wigger, 2000. "On the Intergenerational Incidence of Wage and Consumption Taxes," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  18. Uhlig, H. & Yanagawa, N., 1994. "Increasing the Capital Income Tax Leads to Faster Growth," Discussion Paper 115, Tilburg University, Center for Economic Research. [Downloadable!]
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