Consumption taxes and precautionary savings

Alexis Anagnostopoulos and Qian Li

Economics Letters, 2013, vol. 119, issue 3, 238-242

Abstract: Financing government spending through lump sum taxes does not distort capital when markets are complete but tends to increase precautionary savings under market incompleteness. Using flat consumption taxes instead leaves precautionary savings unaffected, provided certain conditions on utility are met.

Keywords: Incomplete markets; Consumption taxes; Precautionary savings (search for similar items in EconPapers)
JEL-codes: D52 E2 H21 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:119:y:2013:i:3:p:238-242

DOI: 10.1016/j.econlet.2013.03.005

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