Second, even in the absence of fiscal costs, public debt reduces capital accumulation, and may therefore have welfare …-adjusted rate of return to capital. If it is lower than the growth rate, it indicates that the risk-adjusted rate of return to … capital is in fact low. The average risky rate however also plays a role. I show how both the average risky rate and the …

's government uses linear taxation to fund exogenous expenditures and uses public debt to inter-temporally allocate tax distortions …. We characterize a class of environments in which the tax on labor goes to zero in the long run, while the tax on capital …

and income taxes; (b) make wealth taxes less efficient relative to capital income taxes, at given rates of tax; (c) reduce …

which it provides sufficient liquidity to avoid financial constraints. In this case, capital-income taxes are zero in the … long run, and the returns on government debt and capital are equalized. However, if the fiscal space is insufficient, a … wedge opens between the rates of return on government debt and capital. In this case, optimal long-run tax policy is driven …