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Multiple equilibria in Lucas (1990)'s optimal capital taxation model with endogenous learning

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  • Li, Fanghui
  • Wang, Gaowang

Abstract

In the paper we solve the general case of the Lucas (1990) optimal capital taxation model with endogenous growth driven by endogenous learning. We prove Lucas (1990)'s conjecture on zero limiting capital tax and display the possibility of multiple equilibria (i.e., multiple BGPs) in the model.

Suggested Citation

  • Li, Fanghui & Wang, Gaowang, 2019. "Multiple equilibria in Lucas (1990)'s optimal capital taxation model with endogenous learning," MPRA Paper 96005, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:96005
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    File URL: https://mpra.ub.uni-muenchen.de/96005/1/MPRA_paper_96005.pdf
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    References listed on IDEAS

    as
    1. Judd, Kenneth L., 1985. "Redistributive taxation in a simple perfect foresight model," Journal of Public Economics, Elsevier, vol. 28(1), pages 59-83, October.
    2. Lucas, Robert E, Jr, 1990. "Supply-Side Economics: An Analytical Review," Oxford Economic Papers, Oxford University Press, vol. 42(2), pages 293-316, April.
    3. 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.
    4. Chamley, Christophe, 1986. "Optimal Taxation of Capital Income in General Equilibrium with Infinite Lives," Econometrica, Econometric Society, vol. 54(3), pages 607-622, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Multiple Equilibria; Capital Income Tax; Endogenous Growth; Endogenous Learning;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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