Optimal Taxation in Infinitely-Lived Agent and Overlapping Generations Models: A Review - Economic Quarterly, Spring 2001 - Federal Reserve Bank of Richmond
Optimal Taxation in Infinitely-Lived Agent and Overlapping Generations Models: A Review
Optimal Taxation in Infinitely-Lived Agent and Overlapping Generations Models: A Review - Economic Quarterly Spring 2001
Optimal Taxation in Infinitely-Lived Agent and Overlapping Generations Models: A Review - Economic Quarterly, Spring 2001 - Federal Reserve Bank of Richmond
Article
Spring
2001
Martin Gervais {marger1}
Andrés Erosa {andero1}
<p>A survey of the literature on optimal taxation both in infinitely-lived agent models and life-cycle economies suggests that no consensus emerges regarding the optimal tax rate on capital income. Although the tax rate is invariably zero in the long-run steady state of infinitely-lived agent models, this same zero-tax prescription holds for life-cycle economies only under extremely stringent conditions. Both models suggest that capital income should be taxed at non-zero rates during the transition to long-run equilibrium unless individuals have separable preferences between consumption and leisure.</p>
/RichmondFedOrg/publications/research/economic_quarterly/2001/spring/pdf/gervais.pdf
Economic Growth and Business Cycles
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1
Taxation
<p>A survey of the literature on optimal taxation both in infinitely-lived agent models and life-cycle economies suggests that no consensus emerges regarding the optimal tax rate on capital income. Although the tax rate is invariably zero in the long-run steady state of infinitely-lived agent models, this same zero-tax prescription holds for life-cycle economies only under extremely stringent conditions. Both models suggest that capital income should be taxed at non-zero rates during the transition to long-run equilibrium unless individuals have separable preferences between consumption and leisure.</p>
Economic Quarterly
Spring
2001