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.
Length: Date of creation: Oct 1983 Date of revision: Publication status: published relationship to a non-chapter. This should not happen. Please contact NBER. Handle: RePEc:nbr:nberwo:0729
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Roger Gordon & Martin Dietz, 2006.
"Dividends and Taxes,"
NBER Working Papers
12292, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
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)
Auerbach, Alan J & Kotlikoff, Laurence J & Skinner, Jonathan, 1983.
"The Efficiency Gains from Dynamic Tax Reform,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(1), pages 81-100, February.
[Downloadable!] (restricted)