Optimal Taxation with Endogenous Insurance Markets

Mikhail Golosov and Aleh Tsyvinski

The Quarterly Journal of Economics, 2007, vol. 122, issue 2, 487-534

Abstract: We study optimal taxation in an economy where the skills of agents evolve stochastically over time and are private information and in which agents can trade unobservably in competitive markets. We show that competitive equilibria are constrained inefficient. The government can improve welfare by distorting capital accumulation with the sign ofthe distortion depending on the nature of the skill process. Finally, we show that private insurance provision responds endogenously to policy, that government insurance tends to crowd out private insurance, and, in a calibrated example, that this crowding out effect is large.

Date: 2007
References: Add references at CitEc
Citations: View citations in EconPapers (145)

Downloads: (external link)
http://hdl.handle.net/10.1162/qjec.122.2.487 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Optimal Taxation with Endogenous Insurance Markets (2006)
Working Paper: Optimal Taxation with Endogenous Insurance Markets (2005)
Working Paper: Optimal Taxation with Endogenous Insurance Markets (2004)
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: https://EconPapers.repec.org/RePEc:oup:qjecon:v:122:y:2007:i:2:p:487-534.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Quarterly Journal of Economics is currently edited by Robert J. Barro, Lawrence F. Katz, Nathan Nunn, Andrei Shleifer and Stefanie Stantcheva

More articles in The Quarterly Journal of Economics from President and Fellows of Harvard College
Bibliographic data for series maintained by Oxford University Press ().