Not So General Equilibrium and Not So Optimal Taxation

Alan A Tait

Public Finance = Finances publiques, 1989, vol. 44, issue 2, 169-82

Abstract: This paper argues that the policy implications of some articles using general equilibrium and optimal taxation techniques do not sufficiently emphasize the strong assumptions needed to make the models work. Recent literature is reviewed and there is brief discussion of the choice and definition of the equilibrium year, budget constraints and foresight, social welfare functions, individual utility functions, the treatment of time, and the real-life deficiencies of tax administration and compliance. How useful are striking counterintuitive results if they themselves require limiting and unlikely assumptions?

Date: 1989
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Persistent link: https://EconPapers.repec.org/RePEc:pfi:pubfin:v:44:y:1989:i:2:p:169-82

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