Fiscal policy with agents differing in altruism and in ability
This paper presents an overlapping generations model of growth with individuals differing in productivity and altruism. Within such a model wealth is entirely held in the steady-state by the families with the highest degree of altruism. We then look at the macroeconomic and distributive effects of three fiscal policies: public debt, pay-as-you-go social security and estate taxation. Under plausible assumption we show that both public debt and social security are neutral A la Ricardo but increase inequality. We also show that a estate taxation can be Pareto worsening even though it can foster income equality.
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