Equilibrium Determinacy in a Two-Tax System with Utility from Government Expenditure

Seiya Fujisaki

MPRA Paper from University Library of Munich, Germany

Abstract: We analyse the relationship between two kinds of tax and equilibrium determinacy in an economy with government expenditure used for utility. We assume that the income tax rate depends on the level of income itself and that the tax rate of consumption is constant. This describes a realistic tax system which resonates in many countries. Our model complements similar extant research, but we extend the literature by theoretically showing that the expansion of policy types can decrease the risk of instability when one condition slightly changes.

Keywords: equilibrium determinacy; progressive income tax rate; consumption tax; government expenditure on utility. (search for similar items in EconPapers)
JEL-codes: E62 (search for similar items in EconPapers)
Date: 2017-09
New Economics Papers: this item is included in nep-mac
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