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Endogenous Taxation: An Overlapping Generations Approach

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  • Renstrom, Thomas I

Abstract

This paper develops an overlapping generations framework of endogenous taxation. There are three types of heterogeneity among individuals: age, productivity, and bequest motives. The heterogeneity gives rise to a redistributive conflict and, therefore, to different preferences over fiscal policy. Linear taxes are levied on consumption expenditure, wage income, and capital income. These tax rates and the provision of a public good become endogenous through a majority-voting rule. The dynamic politico-economic equilibrium is examined both in and outside the steady state. The focus is on the underlying characteristics of the economy that gives rise to a particular fiscal structure. Copyright 1996 by Royal Economic Society.

Suggested Citation

  • Renstrom, Thomas I, 1996. "Endogenous Taxation: An Overlapping Generations Approach," Economic Journal, Royal Economic Society, vol. 106(435), pages 471-482, March.
  • Handle: RePEc:ecj:econjl:v:106:y:1996:i:435:p:471-82
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    Cited by:

    1. Marsiliani, Laura & Renström, Thomas I, 2007. "Political Institutions and Economic Growth," CEPR Discussion Papers 6143, C.E.P.R. Discussion Papers.
    2. Selim, Sheikh, 2006. "On Policy Relevance of Ramsey Tax Rules," Cardiff Economics Working Papers E2006/19, Cardiff University, Cardiff Business School, Economics Section, revised Jul 2006.
    3. Laura Marsiliani & Thomas I Renstrom, 2005. "Political Institutions, Environmental Policy and Growth," Money Macro and Finance (MMF) Research Group Conference 2005 38, Money Macro and Finance Research Group.
    4. Tetsuo Ono & Yuki Uchida, 2018. "Capital Income Taxation, Economic Growth, and the Politics of Public Education," Discussion Papers in Economics and Business 18-05, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
    5. Mahieu, Géraldine & Rottier, Stéphane, 2000. "Preferences over Capital Income versus Labor Income Taxation," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2000021, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    6. Thomas Renstrom & Laura Marsiliani, 2005. "Political Institutions and Economic Growth," Money Macro and Finance (MMF) Research Group Conference 2005 53, Money Macro and Finance Research Group.
    7. Marsiliani, Laura & Renström, Thomas I, 2003. "Inequality, Environmental Protection and Growth," CEPR Discussion Papers 3754, C.E.P.R. Discussion Papers.
    8. Laura Marsiliani & Thomas Renstrom, 2002. "Inequality, Environmental Protection and Growth," Wallis Working Papers WP35, University of Rochester - Wallis Institute of Political Economy.

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