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Sunday, February 16, 2020 | History

4 edition of Optimal taxation in an RBC model found in the catalog.

Optimal taxation in an RBC model

Pierpaolo Benigno

Optimal taxation in an RBC model

a linear-quadratic approach

by Pierpaolo Benigno

  • 29 Want to read
  • 39 Currently reading

Published by National Bureau of Economic Research in Cambridge, MA .
Written in English

    Subjects:
  • Income tax -- Mathematical models.,
  • Taxation -- Mathematical models.

  • Edition Notes

    StatementPierpaolo Benigno, Michael Woodford.
    SeriesNBER working paper series ;, working paper 11029, Working paper series (National Bureau of Economic Research : Online) ;, working paper no. 11029.
    ContributionsWoodford, Michael, Professor., National Bureau of Economic Research.
    Classifications
    LC ClassificationsHB1
    The Physical Object
    FormatElectronic resource
    ID Numbers
    Open LibraryOL3476644M
    LC Control Number2005616173

    We always act with integrity and in a straightforward, open and honest manner in all tax matters. For example, a labor, hours worked b productivity, how effective firms use such capital or labor, c investment, amount of capital saved to help future endeavors, and d capital stock, value of machines, buildings and other equipment that help firms produce their goods. Get exclusive access to content from our First Edition with your subscription. If there were no shocks, the economy would just continue following the growth trend with no business cycles. Both Mirrlees and Saez argue that high-ability might have higher saving rates due to different preferences.

    Observe how the peaks and troughs align at almost the same places and how the upturns and downturns coincide. This explains why investment spending is more volatile than consumption. Furthermore, Aiyagari and Chamley show that capital income taxation is desirable when consumption is positively correlated with savings in a model featuring borrowing-constrained agents with infinite lives and uncertainty. Access and download statistics Corrections All material on this site has been provided by the respective publishers and authors. This indicates that the deviations in real GNP are very small comparatively, and might be attributable to measurement errors rather than real deviations. All other points above and below the line imply deviations.

    In this model, Harberger theorizes that by redistributing the economy's resources, the market will move toward a constant equilibrium in the long-run where the elasticities of substitution are the same for both capital and labor and are then equal to the elasticity of substitution between the two goods being consumed. The second objective, income redistribution, is meant to lessen inequalities in the distribution of income and wealth. While that question has no definitive answer, tax policy must balance competing goals such as revenue raising, redistribution, and efficiency. Summers 2. Feldstein recognizes that high taxes deter people from actively engaging in the market, causing a lower production rate as well as a deadweight loss.


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Optimal taxation in an RBC model by Pierpaolo Benigno Download PDF Ebook

If CitEc recognized a reference but did not link an item Optimal taxation in an RBC model book RePEc to it, you can help with this form. Kydland and Edward C. Your experiences may vary. For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact:.

One is persistence. A common method to obtain this trend is the Hodrick—Prescott filter. A series of positive deviations leading to peaks are booms and a series of negative deviations leading to troughs are recessions.

Moreover, the sale does not occur, so the government never collects the revenue that was the whole reason for the distortion. Summers noted that Prescott is unable to suggest any specific technological shock for an actual downturn apart from the oil price shock in the s. The government's objective is to use redistributive taxation to provide agents with insurance against the individual income risk.

In earlier times, and again today, governments have utilized taxation for other than merely fiscal purposes. Economists refer to these cyclical movements about the trend as business cycles. Furthermore, this can potentially apply to a broader range of conditions.

A tax on the unimproved aspects of land tends to be a progressive tax, since the wealthier one is, the more land one tends to own and the poor typically do not own any land at all. Subscribe today There are likely to be conflicts among these three objectives.

This offer may not be combined or used in conjunction with any other Personal Banking Account offers unless otherwise indicated. His study coincides with the original hypothesis that retail sales taxes are fully shifted to retail prices.

Take It All to a New Level Make payments with a tap of your smartphone and securely store your cards on your device. Conversely, the effective tax rate on marginal projects with a return on equity closer to the "normal" level will be minimised.

Instead, he may consume some but invest the rest in capital to enhance production in subsequent periods and thus increase future consumption.

Optimal capital income taxation

Economic theory suggests that a pure land value tax which succeeds in avoiding taxation of improvements could actually have a negative deadweight loss positive externalitydue to productivity gains arising from efficient land use.

Thus, capital income taxation, i. A string of such productivity shocks will likely result in a boom. There exist seemingly random fluctuations around this growth trend.

Michael Woodford

This is just the value of the goods and services produced by a country's businesses and workers. Therefore most economists, even among the new classicists, do not accept the policy-ineffectiveness proposition.

Observing these similarities yet seemingly non-deterministic fluctuations Optimal taxation in an RBC model book trend, the question arises as to why any of this occurs. This momentarily increases the effectiveness of workers and capital, allowing a given level of capital and labor to produce more output.

It does not create excess burden because these taxes do not alter economic decisions. In the absence of a strong reason for interference, such as the need to reduce pollution, the first objective, resource allocation, is furthered if tax policy does not interfere with market-determined allocations.

Open and constructive relationship with HMRC RBC is committed to building positive long term relationships with HMRC and other tax authorities, based on mutual trust and transparency wherever possible.

Feldstein Optimal taxation in an RBC model book that policy makers should analyze these two aspects separately and he presented a method on how to input the net effect of the changes of the efficient corporate tax rates into the individual tax returns by focusing on the vital difference between real and nominal capital income.

Commodity taxes[ edit ] Frank P. To explain causes of such fluctuations may appear rather difficult given these irregularities.Tax Structure, Optimal Fiscal Policy, and the Business Cycle This article develops an RBC model in which government fiscal variables such as tax rates and public expenditures are endogenous.

The authors characterize the "optimal" behavior of fiscal policy over the business cycle for two different tax structures and relate this behavior to Cited by: 3. the baseline RBC model (or any other model): an agent with the preference to smooth consumption over time will invest in productive periods and eat capital in unproductive periods.

The model Now let’s put this into a model. We’ll take the equilibrium growth model that we’ve already looked at, and add a labor-leisure choice, and a.

Since the optimal policy maker in our model faces similar trade-offs as the policy maker in the model by Schmitt-Grohé and Uribe (), the steady-state values of the tax rates are similar.

Approximation of optimal policy rules using linear rules. We want to approximate optimal Cited by: "Optimal Taxation pdf an RBC Model: A Linear Quadratic Approach." Journal of Economic Dynamics and Control 30 (): – Chamley, C. "Efficient Tax Reform in a Dynamic Model of General Equilibrium." Quarterly Journal of Economicsno.

2 (): – ———. "Optimal Taxation of Capital Income in General Equilibrium with.Optimal Taxation in a Growth Model with Public Capital Stock and Adjustment Costs By Been-Lon Chen* Academia Sinica April Abstract This paper extends Turnovsky (a, b) into a dynamic AK growth model with public capital accumulation and adjustment costs, and studies the optimal tax structure between capital and consumption.Optimal Taxation in a Growth Model with Public Capital Stock and Adjustment Costs By Been-Lon Ebook Academia Sinica April Abstract This paper extends Turnovsky (a, b) into a dynamic AK growth model with public capital accumulation and adjustment costs, and studies the optimal tax structure between capital and consumption.