Ramsey models of fiscal and monetary policy with perfectly-competitive product markets and a fixed supply of capital … that incorporates capital accumulation and habit persistence predicts highly persistent inflation. The result depends on … habit and capital on inflation persistence and also relate our findings to recent work on optimal fiscal policy with …

find four substantive lessons for policymaking: Capital income taxes should be high initially and then roughly zero; tax …

find that because capital is underaccumulated, optimal policy includes a subsidy on capital income. Taken together, these …

We study aggregate, distributional, and welfare effects of a permanent reduction in the capital tax rate in a dynamic … equilibrium model with capital-skill complementarity. Such a tax reform leads to expansionary long-run aggregate effects, but is … distortionary labor or consumption tax rates have to increase to finance the capital tax rate cut. An extension to a model with …