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Different policy effects of Ramsey and overlapping generations models

Minoru Watanabe and Masaya Yasuoka

MPRA Paper from University Library of Munich, Germany

Abstract: Effects of taxation are examined in many studies. For such studies, the model economy assumes a logarithmic utility function. Results derived from our study indicate that attention should be devoted to using logarithm utility functions. We check the redistribution policy effect financed by capital income taxation in models of two types: a Ramsey model and an overlapping generations model. If the labor supply is inelastic, then effects of the redistribution policy financed by taxation of capital income differs between the Ramsey model and the overlapping generations model. However, if the labor supply is elastic, then the policy financed by capital income taxation is the same between the Ramsey model and the overlapping generations model. Moreover, this study presents simulation results.

Keywords: Overlapping generations model; Ramsey model; Redistribution; Taxation (search for similar items in EconPapers)
JEL-codes: E24 H20 (search for similar items in EconPapers)
Date: 2021-09-06
New Economics Papers: this item is included in nep-dge, nep-isf, nep-mac, nep-pub and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:109635

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