Political Economy of Intermediate Goods Taxation

Daron Acemoglu, Michael Golosov and Aleh Tsyvinski

Journal of the European Economic Association, 2008, vol. 6, issue 2-3, pages 353-366

Abstract: We generalize the Diamond-Mirrlees production efficiency theorem, that there should be no taxes on sectors producing pure intermediate goods, to an environment with political economy constraints. In our economy, allocations and taxation are decided by self-interested politicians without the power to commit to future policies. The Diamond-Mirrlees production efficiency result holds even when political economy constraints introduce distortions on labor supply and capital accumulation. (JEL: H11, H21, E61, P16) (c) 2008 by the European Economic Association.

JEL-codes: H11 H21 E61 P16 (search for similar items in EconPapers)
Date: 2008

Downloads: (external link)
http://www.mitpressjournals.org/doi/pdfplus/10.1162/JEEA.2008.6.2-3.353 link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
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: http://EconPapers.repec.org/RePEc:tpr:jeurec:v:6:y:2008:i:2-3:p:353-366

Ordering information: This journal article can be ordered from
http://www.mitpressjournals.org/jeea

Access Statistics for this article

Journal of the European Economic Association is edited by Xavier Vives, George-Marios Angeletos, Orazio P. Attanasio, Fabio Canova and Roberto Perotti

More articles in Journal of the European Economic Association from MIT Press
Series data maintained by Christopher F. Baum ().