Social discounting and incentive compatible fiscal policy
This paper considers a representative agent model of linear capital and labor income taxation in which the government cannot commit ex-ante to a sequence of policies for the future. In this setup, if the government is more impatient than the households, the capital income tax will be positive in steady state. Thus, impatience and lack of commitment are able to generate positive capital taxes in the long run, although each of these characteristics individually was not. Furthermore, the steady state to which the economy converges is independent of initial conditions.
Volume (Year): 147 (2012)
Issue (Month): 6 ()
|Contact details of provider:|| Web page: http://www.elsevier.com/locate/inca/622869|
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.:
- Daron Acemoglu & Mikhail Golosov & Aleh Tsyvinski, 2009.
"Political Economy of Ramsey Taxation,"
NBER Working Papers
15302, National Bureau of Economic Research, Inc.
- Acemoglu, Daron & Golosov, Mikhail & Tsyvinski, Aleh, 2011. "Political economy of Ramsey taxation," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 467-475, August.
- Acemoglu, Daron & Golosov, Mikhail & Tsyvinski, Aleh, 2011. "Political economy of Ramsey taxation," Journal of Public Economics, Elsevier, vol. 95(7), pages 467-475.
- Lucas, Robert Jr. & Stokey, Nancy L., 1983.
"Optimal fiscal and monetary policy in an economy without capital,"
Journal of Monetary Economics,
Elsevier, vol. 12(1), pages 55-93.
- Robert E. Lucas Jr. & Nancy L. Stokey, 1982. "Optimal Fiscal and Monetary Policy in an Economy Without Capital," Discussion Papers 532, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Reis, Catarina, 2006.
"Taxation without Commitment,"
2071, University Library of Munich, Germany.
- De Bonis, Valeria & Spataro, Luca, 2005. "Taxing Capital Income As Pigouvian Correction: The Role Of Discounting The Future," Macroeconomic Dynamics, Cambridge University Press, vol. 9(04), pages 469-477, September.
- V. V. Chari & Patrick J. Kehoe, 1989.
"Sustainable plans and mutual default,"
124, Federal Reserve Bank of Minneapolis.
- Christopher Sleet & Sevin Yeltekin, 2006. "Credibility and endogenous societal discounting," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(3), pages 410-437, July.
- Benhabib, J. & Rustichini, A., 1996.
"Optimal Taxes Without Commitment,"
96-18, C.V. Starr Center for Applied Economics, New York University.
- Emmanuel Farhi & IvÃ¡n Werning, 2007.
"Inequality and Social Discounting,"
Journal of Political Economy,
University of Chicago Press, vol. 115, pages 365-402.
- Mark Aguiar & Manuel Amador, 2010.
"Growth in the Shadow of Expropriation,"
2010 Meeting Papers
1194, Society for Economic Dynamics.
- Sleet, Christopher & Yeltekin, Sevin, 2008. "Politically credible social insurance," Journal of Monetary Economics, Elsevier, vol. 55(1), pages 129-151, January.
- Christopher Phelan & Ennio Stacchetti, 2001.
"Sequential Equilibria in a Ramsey Tax Model,"
Econometric Society, vol. 69(6), pages 1491-1518, November.
- V. V. Chari & Patrick J Kehoe, 1998.
Levine's Working Paper Archive
600, David K. Levine.
- Dominguez, Begona, 2007. "Public debt and optimal taxes without commitment," Journal of Economic Theory, Elsevier, vol. 135(1), pages 159-170, July.
- Chamley, Christophe, 1986. "Optimal Taxation of Capital Income in General Equilibrium with Infinite Lives," Econometrica, Econometric Society, vol. 54(3), pages 607-22, May.
When requesting a correction, please mention this item's handle: RePEc:eee:jetheo:v:147:y:2012:i:6:p:2469-2482. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If references are entirely missing, you can add them using this form.