Capital Income Taxes and Growth in a Stochastic Economy: A Numerical Analysis of the Role of Risk Aversion and Intertemporal Substitution
Santanu Chatterjee (),
Paola Giuliano () and
Stephen J Turnovsky ()
Journal of Public Economic Theory, 2004, vol. 6, issue 2, 277-310
This paper undertakes a numerical analysis of the effects of changes in the tax rates on domestic and foreign capital income in a stochastically growing open economy under recursive preferences, in which the rate of time preference, ϵ, and the coefficient of risk aversion, R, can be set independently. The responses of the equilibrium growth rate, its volatility, and welfare to changes in the tax changes considered are highly sensitive to the independent variations in both ϵ and R. Consequently, the errors committed by using the conventional constant elasticity utility function, even for small violations of the compatibility condition (R= 1/ϵ) can be significant, suggesting that this functional form should be employed with caution. Copyright 2004 Blackwell Publishing Inc..
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9) Track citations by RSS feed
Downloads: (external link)
http://www.blackwell-synergy.com/servlet/useragent ... &year=2004&part=null link to full text (text/html)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bla:jpbect:v:6:y:2004:i:2:p:277-310
Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1097-3923
Access Statistics for this article
Journal of Public Economic Theory is currently edited by Rabah Amir, Gareth Myles and Myrna Wooders
More articles in Journal of Public Economic Theory from Association for Public Economic Theory Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().