Capital Taxation: Quantitative Explorations of the Inverse Euler Equation
Emmanuel Farhi () and
Journal of Political Economy, 2012, vol. 120, issue 3, pages 000 - 000
Economies with private information provide a rationale for capital taxation. In this paper we ask what the welfare gains from following this prescription are. We develop a method to answer this question in standard general equilibrium models with idiosyncratic uncertainty and incomplete markets. We find that general equilibrium forces are important and greatly reduce the welfare gains. Once these effects are taken into account, the gains are relatively small in our benchmark calibration. These results do not imply that dynamic aspects of social insurance design are unimportant, but they do suggest that capital taxation may play a modest role.
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (12) Track citations by RSS feed
Downloads: (external link)
Access to the online full text or PDF requires a subscription.
Working Paper: Capital Taxation: Quantitative Explorations of the Inverse Euler Equation (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:ucp:jpolec:doi:10.1086/666747
Access Statistics for this article
More articles in Journal of Political Economy from University of Chicago Press
Series data maintained by Journals Division ().