Political economy of Ramsey taxation
Mikhail Golosov and
Journal of Public Economics, 2011, vol. 95, issue 7, 467-475
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)
JEL-codes: E61 H11 H21 P16 (search for similar items in EconPapers)
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Journal Article: Political economy of Ramsey taxation (2011)
Working Paper: Political Economy of Ramsey Taxation (2009)
Working Paper: Political Economy of Ramsey Taxation (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:95:y:2011:i:7:p:467-475
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