Previous literature demonstrates that in a computational life cycle model the optimal tax on capital is positive and large. Given the computational complexities of these overlapping generations models it is helpful to determine the relative importance of the economic factors driving this result....

This paper shows that in a life-cycle framework, the optimal tax on capital crucially depends on how human capital is accumulated. We focus on three cases common to the macroeconomic literature: (i) Learning-By-Doing (LBD), (ii) Learning-Or-Doing (LOD), and (iii) exogenous accumulation. First,...

This paper considers the impact of how human capital is accumulated on optimal capital tax policy in a life cycle model. In particular, it compares the optimal capital tax when human capital is accumulated exogenously, endogenously through learning-by-doing, and endogenously through...