Engler, Philipp; Strehl, Wolfgang - 2016
We analyze the positive and normative effects of a progressive tax on wages in a nonlinear New Keynesian DSGE model in … tax on the volatility and the level of macroeconomic variables, for both intertemporally optimizing ("Ricardian") and non … shocks. Aggregate welfare falls, however, when rule-of-thumb households are added to the analysis. The progressive tax …