Advanced Search
MyIDEAS: Login

Optimal taxation with restrictions on the governmemnt budget deficit

Contents:

Author Info

  • Karl Shell
  • Christian Ghiglino

Abstract

In this paper we investigate the effects of government budget deficit restrictions in a finite horizon model with imperfect consumer credit market. When financial markets are perfect anonymous lump-sum taxes are sufficient to achieve irrelevance of government budget deficit restrictions in the sense that the timing of the taxation is completely indifferent. With imperfect consumer credit markets strong irrelevance does not hold. We consider a weaker form of irrelevance in which the government is able to change its budget deficit in all periods but the magnitude of this change is limited. We show that weak irrelevance holds in the presence of endogenous credit constraints provided there exists a sufficiently large number of anonymous consumption taxes. We use this result to characterize the optimal tax scheme needed to finance the production of a public good. We show that for an open set of economies the inclusion of an anonymous consumption tax in a purely anonymous lump-sum scheme increases social welfar

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.vwi.unibe.ch/staff/ghiglino/shellrest10-02-04.pdf
Our checks indicate that this address may not be valid because: 404 Not Found. If this is indeed the case, please notify (Christian Zimmermann)
File Function: main text
Download Restriction: no

Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2004 Meeting Papers with number 434.

as in new window
Length:
Date of creation: 2004
Date of revision:
Handle: RePEc:red:sed004:434

Contact details of provider:
Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
Fax: 1-860-486-4463
Email:
Web page: http://www.EconomicDynamics.org/society.htm
More information through EDIRC

Related research

Keywords: Consumption taxes; deficit irrelevance; optimal taxation;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

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:red:sed004:434

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

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.