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Political Economy of Taxation in an Overlapping-Generations Economy

  • Marco Bassetto

    (Federal Reserve Bank of Chicago)

This paper analyzes the effects of intergenerational conflict on capital and labor income tax rates, transfers, and government spending in a model of multidimensional policy choice. The different nature of tax liabilities for the young and the old can explain why the old receive large gross lump-sum transfers through social security, while the young receive little or none. A natural link also emerges between the size of the government as a provider of public goods and the magnitude of transfers that the same government will implement. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1016/j.red.2007.06.002
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Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 11 (2008)
Issue (Month): 1 (January)
Pages: 18-43

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Handle: RePEc:red:issued:06-188
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