Time-consistent fiscal policy under heterogeneity: conflicting or common interests?

Konstantinos Angelopoulos, Jim Malley and Apostolis Philippopoulos
Additional contact information
Konstantinos Angelopoulos: University of Glasgow
Apostolis Philippopoulos: Athens University of Economics and Business,CESifo

No 142, Working Papers from Bank of Greece

Abstract: This paper studies the aggregate and distributional implications of Markov-perfect tax-spending policy in a neoclassical growth model with capitalists and workers. Focusing on the long run, our main findings are: (i) it is optimal for a benevolent government, which cares equally about its citizens, to tax capital heavily and to subsidize labour; (ii) a Pareto improving means to reduce inefficiently high capital taxation under discretion is for the government to place greater weight on the welfare of capitalists; (iii) capitalists and workers preferences, regarding the optimal amount of "capitalist bias", are not aligned implying a conflict of interests.

Keywords: Optimal fiscal policy; Markov-perfect equilibrium; heterogeneous agents (search for similar items in EconPapers)
JEL-codes: E62 H21 (search for similar items in EconPapers)
Pages: 29
Date: 2011-12
New Economics Papers: this item is included in nep-cba, nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.bankofgreece.gr/BogEkdoseis/Paper2011142.pdf Full Text (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

Related works:
Working Paper: Time-consistent Fiscal Policy under Heterogeneity: Conflicting or Common Interests? (2011)
Working Paper: Time-consistent fiscal policy under heterogeneity: Conflicting or common interests? (2011)
Working Paper: Time-consistent fiscal policy under heterogeneity: Conflicting or common interests? (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bog:wpaper:142

Access Statistics for this paper

More papers in Working Papers from Bank of Greece Contact information at EDIRC.
Bibliographic data for series maintained by Anastasios Rizos ().