This paper studies the capital accumulation and welfare implications of reducing capital income taxation in a general equilibrium economy with uninsurable investment risks. It has been shown that, with uninsurable investment risks, under-accumulation of capital may result compared to the...

We examine the optimal taxation of capital in a general-equilibrium heterogeneous-agent economy with uninsurable idiosyncratic investment or capital income risk. We demonstrate analytically that the ex ante optimal tax, evaluated in the long run, maximizes human wealth, namely the present...

We examine the optimal taxation of capital in a Ramsey setting of a general-equilibrium heterogeneous-agent economy with uninsurable idiosyncratic investment or capital-income risk. We prove that the ex ante optimal tax, evaluated at steady state, maximizes human wealth, namely the present...