Heterogeneous Beliefs and Optimal Taxation
signal about the fundamental. The rst characteristic implies that the best policy (tax on investment) with commitment is state contingent. The second and third characteristics make the information incomplete. In particular, agents have di erent information sets, and therefore di erent beliefs, about the true state of the economy. As a result, independently of the accuracy of the signal, incomplete information reduces the set of equilibrium payo s. First, we show that any policy that depends solely on the fundamental cannot be an equilibrium. Second, the best equilibrium policy is independent of the fundamental. Finally, for any discount factor strictly smaller than one and for any size of the noise, the best equilibrium is inecient.
|Date of creation:||2009|
|Contact details of provider:|| Postal: Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA|
Web page: http://www.EconomicDynamics.org/
More information through EDIRC
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.:
- Susan Athey & Andrew Atkeson & Patrick J. Kehoe, 2005.
"The Optimal Degree of Discretion in Monetary Policy,"
Econometric Society, vol. 73(5), pages 1431-1475, September.
- Susan Athey & Andrew Atkeson & Patrick J. Kehoe, 2002. "The optimal degree of discretion in monetary policy," Working Papers 626, Federal Reserve Bank of Minneapolis.
- Susan Athey & Andrew Atkeson & Patrick J. Kehoe, 2004. "The optimal degree of discretion in monetary policy," International Finance Discussion Papers 801, Board of Governors of the Federal Reserve System (U.S.).
- Susan Athey & Andrew Atkeson & Patrick Kehoe, 2003. "The Optimal Degree of Discretion in Monetary Policy," NBER Working Papers 10109, National Bureau of Economic Research, Inc.
- Athey, Susan & Atkeson, Andrew & Kehoe, Patrick J., 2004. "The optimal degree of discretion in monetary policy," Working Paper Series 338, European Central Bank.
- Susan Athey & Andrew Atkeson & Patrick J. Kehoe, 2004. "The optimal degree of discretion in monetary policy," Staff Report 326, Federal Reserve Bank of Minneapolis.
- Susan Athey & Kyle Bagwell & Chris Sanchirico, 2004. "Collusion and Price Rigidity," Review of Economic Studies, Oxford University Press, vol. 71(2), pages 317-349.
- Susan Athey & Kyle Bagwell & Chris Sanchirico, 1998. "Collusion and Price Rigidity," Working papers 98-23, Massachusetts Institute of Technology (MIT), Department of Economics.
- Kyle Bagwell, 2004. "Collusion and Price Rigidity," Theory workshop papers 658612000000000081, UCLA Department of Economics.
- Bergin, James & Bernhardt, Dan, 1992. "Anonymous sequential games with aggregate uncertainty," Journal of Mathematical Economics, Elsevier, vol. 21(6), pages 543-562.
- James Bergin & Dan Bernhardt, 1989. "Anonymous Sequential Games with Aggregate Uncertainty," Working Papers 760, Queen's University, Department of Economics.
- Mailath, George J. & Samuelson, Larry, 2006. "Repeated Games and Reputations: Long-Run Relationships," OUP Catalogue, Oxford University Press, number 9780195300796. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:red:sed009:826. 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: (Christian Zimmermann)
If references are entirely missing, you can add them using this form.