IDEAS home Printed from https://ideas.repec.org/a/bla/jpbect/v6y2004i1p25-41.html

Time Consistent Optimal Redistribution Policy in an Overlapping Generations Model

Author

Listed:
  • Oliver Lorz

Abstract

This paper analyzes optimal redistribution policy in a two‐period version of the overlapping generations model with heterogeneous individuals and asymmetric information between the government and the private sector. The government of the first period determines redistribution transfers for the first period but is not able to set the policy variables for the second period. With respect to savings the paper considers two scenarios: In the first scenario savings are observable and the government can set individual savings levels in addition to redistributive transfers. In the second scenario savings and capital incomes are not observable. In both cases the redistribution equilibrium is not second‐best efficient.

Suggested Citation

  • Oliver Lorz, 2004. "Time Consistent Optimal Redistribution Policy in an Overlapping Generations Model," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 6(1), pages 25-41, February.
    • Handle: RePEc:bla:jpbect:v:6:y:2004:i:1:p:25-41
    DOI: 10.1111/j.1467-9779.2004.00155.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-9779.2004.00155.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1467-9779.2004.00155.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Kydland, Finn E. & Prescott, Edward C., 1980. "Dynamic optimal taxation, rational expectations and optimal control," Journal of Economic Dynamics and Control, Elsevier, vol. 2(1), pages 79-91, May.
    2. J. A. Mirrlees, 1971. "An Exploration in the Theory of Optimum Income Taxation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 38(2), pages 175-208.
    3. Ordover, Janusz A. & Phelps, Edmund S., 1979. "On the Concept of Optimal Taxation in an Overlapping-Generations Model of Efficient Growth," Working Papers 79-09, C.V. Starr Center for Applied Economics, New York University.
    4. Konrad, Kai A., 2001. "Privacy and time-consistent optimal labor income taxation," Journal of Public Economics, Elsevier, vol. 79(3), pages 503-519, March.
    5. Ordover, J. A. & Phelps, E. S., 1979. "The concept of optimal taxation in the overlapping-generations model of capital and wealth," Journal of Public Economics, Elsevier, vol. 12(1), pages 1-26, August.
    6. Atkinson, A. B. & Stiglitz, J. E., 1976. "The design of tax structure: Direct versus indirect taxation," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 55-75.
    7. Patrick J. Kehoe, 1989. "Policy Cooperation Among Benevolent Governments May Be Undesirable," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 56(2), pages 289-296.
    8. Dillen, Mats & Lundholm, Michael, 1996. "Dynamic income taxation, redistribution, and the ratchet effect," Journal of Public Economics, Elsevier, vol. 59(1), pages 69-93, January.
    9. Boadway, Robin & Keen, Michael, 1998. "Evasion and Time Consistency in the Taxation of Capital Income," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 461-476, May.
    10. Stiglitz, Joseph E., 1987. "Pareto efficient and optimal taxation and the new new welfare economics," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 2, chapter 15, pages 991-1042, Elsevier.
    11. Fischer, Stanley, 1980. "Dynamic inconsistency, cooperation and the benevolent dissembling government," Journal of Economic Dynamics and Control, Elsevier, vol. 2(1), pages 93-107, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jinlu Li & Shuanglin Lin, 2021. "Existence of equilibrium in an overlapping‐generations model with government debt," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(4), pages 691-709, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Craig Brett & John A. Weymark, 2019. "Optimal nonlinear taxation of income and savings without commitment," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 21(1), pages 5-43, February.
    2. Craig Brett & John A. Weymark, 2005. "Optimal Nonlinear Taxation of Income and Savings in a Two Class Economy," Vanderbilt University Department of Economics Working Papers 0525, Vanderbilt University Department of Economics.
    3. Konrad, Kai A., 2001. "Privacy and time-consistent optimal labor income taxation," Journal of Public Economics, Elsevier, vol. 79(3), pages 503-519, March.
    4. Konrad, Kai A., 1999. "Privacy, time consistent optimal labor income taxation and education policy," IZA Discussion Papers 82, IZA Network @ LISER.
    5. Chen, Yunmin & Guo, Jang-Ting & Krause, Alan, 2020. "The credibility of commitment and optimal nonlinear savings taxation," Journal of Macroeconomics, Elsevier, vol. 65(C).
    6. Aronsson, Thomas & Bastani, Spencer & Tayibov, Khayyam, 2021. "Social Exclusion and Optimal Redistribution," Umeå Economic Studies 1004, Umeå University, Department of Economics.
    7. OBARA, Takuya, 2018. "Optimal human capital policies under the endogenous choice of educational types," CCES Discussion Paper Series 66_v2, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
    8. Mervyn A. King, 1980. "Savings and Taxation," NBER Working Papers 0428, National Bureau of Economic Research, Inc.
    9. Spencer Bastani & Daniel Waldenström, 2018. "How should capital be taxed? The Swedish experience," Working Papers hal-02878153, HAL.
    10. Waldenstrom, Daniel & Bastani, Spencer, 2018. "How Should Capital Be Taxed? Theory and Evidence from Sweden," CEPR Discussion Papers 12880, C.E.P.R. Discussion Papers.
    11. Paweł Doligalski & Piotr Dworczak & Joanna Krysta & Filip Tokarski, 2025. "Incentive Separability," Journal of Political Economy Microeconomics, University of Chicago Press, vol. 3(3), pages 539-567.
    12. Cremer, Helmuth & Pestieau, Pierre & Rochet, Jean-Charles, 2003. "Capital income taxation when inherited wealth is not observable," Journal of Public Economics, Elsevier, vol. 87(11), pages 2475-2490, October.
    13. OBARA, Takuya, 2017. "Optimal human capital policies under the endogenous choice of educational types," CCES Discussion Paper Series 66, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
    14. Bas Jacobs & A. Bovenberg, 2010. "Human capital and optimal positive taxation of capital income," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 17(5), pages 451-478, October.
    15. Saez, Emmanuel & Stantcheva, Stefanie, 2018. "A simpler theory of optimal capital taxation," Journal of Public Economics, Elsevier, vol. 162(C), pages 120-142.
    16. Aronsson, Thomas & Johansson-Stenman, Olof, 2014. "Positional preferences in time and space: Optimal income taxation with dynamic social comparisons," Journal of Economic Behavior & Organization, Elsevier, vol. 101(C), pages 1-23.
    17. Louis Kaplow, 2020. "A Unified Perspective on Efficiency, Redistribution, and Public Policy," NBER Working Papers 26683, National Bureau of Economic Research, Inc.
    18. Robin Boadway & David Wildasin, 1994. "Taxation and savings: a survey," Fiscal Studies, Institute for Fiscal Studies, vol. 15(3), pages 19-63, August.
    19. Thomas Aronsson & Olof Johansson‐Stenman & Tomas Sjögren, 2019. "Social Comparisons and Optimal Taxation in a Small Open Economy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(4), pages 1500-1532, October.
    20. Stanley L. Winer & Walter Hettich, 2002. "The Political Economy of Taxation: Positive and Normative Analysis when Collective Choice Matters," Carleton Economic Papers 02-11, Carleton University, Department of Economics, revised 2004.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jpbect:v:6:y:2004:i:1:p:25-41. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/apettea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.