Redistributive Taxation in a Small Open Economy

Cem Karayalcin

Canadian Journal of Economics, 1996, vol. 29, issue 3, 688-98

Abstract: This paper studies the effects of redistributing the tax burden across households on the current account. The set-up is a dynamic small open economy with infinitely lived households that have perfect foresight. It is shown that the different speeds at which households adjust consumption levels to their long-run values may cause nonmonotonic transient paths.

Date: 1996
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