IDEAS home Printed from https://ideas.repec.org/a/icf/icfjpf/v04y2006i3p6-14.html
   My bibliography  Save this article

Optimal Taxation Policy In The Presence Of Comprehensive Reference Externalities

Author

Listed:
  • Constantin Gurdgiev

Abstract

The author develops a model of optimal taxation in the presence of consumption and labor supply references, which extends the model of Ljungqvist and Uhlig (2000). The paper shows that under the assumed ‘keeping up with the Joneses’ style peer-group effects, in both consumption and labor supply, optimal tax on capital remains negative. However, with respect to the optimal labor tax, the first-best policy requires positive or negative labor income taxation depending on the strength of referencing in consumption, relative to the strength of referencing in labor, as well as other parameters of the model. This result extends Guo (2003) conclusions. In terms of fiscal policy prescriptions, the author shows that the presence of combined referencing effects in consumption and labor supply, as opposed to the referencing in consumption alone, reduces the scope of the Keynesian intervention.

Suggested Citation

  • Constantin Gurdgiev, 2006. "Optimal Taxation Policy In The Presence Of Comprehensive Reference Externalities," The IUP Journal of Public Finance, IUP Publications, vol. 0(3), pages 6-14, August.
  • Handle: RePEc:icf:icfjpf:v:04:y:2006:i:3:p:6-14
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    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:icf:icfjpf:v:04:y:2006:i:3:p:6-14. 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: (G R K Murty). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.