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Political economy of Ramsey taxation

Daron Acemoglu, Mikhail Golosov and Aleh Tsyvinski

Journal of Public Economics, 2011, vol. 95, issue 7-8, 467-475

Abstract: We study the dynamic taxation of capital and labor in the Ramsey model under the assumption that taxes and public good provision are decided by a self-interested politician who cannot commit to policies. We show that, as long as the politician is as patient as the citizens, the Chamley-Judd result of zero long-run taxes holds. In contrast, if the politician is less patient than the citizens, the best (subgame perfect) equilibrium from the viewpoint of the citizens involves long-run capital taxation.

Keywords: Capital; taxation; Fiscal; policy; Political; economy (search for similar items in EconPapers)
Date: 2011
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Journal Article: Political economy of Ramsey taxation (2011) Downloads
Working Paper: Political Economy of Ramsey Taxation (2009) Downloads
Working Paper: Political Economy of Ramsey Taxation (2008) Downloads
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