Optimal Capital Taxation and Debt Policy in a Finite-Horizon Macro Model
This article analyzes optimal taxation and debt policies in a model of overlapping generations of finite-lived agents. Taxes are levied proportionately on capital and labor incomes. Tax rates are uniform across all agents. When the social and private discount rates coincide, the optimal steady-state tax rate on capital income is zero. Alternatively, the optimal steady-state tax rate on capital income is positive (or negative), and the optimal steady-state level of government debt is larger (or smaller) whenever the social discount rate is greater (or less) than the private discount rate.
Year of publication: |
1997
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Authors: | Mccafferty, Stephen |
Published in: |
Public Finance Review. - Vol. 25.1997, 6, p. 577-600
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Saved in:
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