A TALE OF TAX POLICIES IN OPEN ECONOMIES
Stéphane Auray,
Aurélien Eyquem and
Paul Gomme
International Economic Review, 2016, vol. 57, issue 4, 1299-1333
Abstract:
To evaluate fiscal policy reforms for Euro‐area countries, this article develops and calibrates a small open economy model. Debt reduction reforms require higher tax rates in the short term in exchange for lower rates in the long term as the debt‐servicing burden falls. Using the capital income tax to implement such a policy leads to welfare gains; the consumption tax, a very small welfare gain; and the labor income tax, a welfare loss. Holding fixed the long‐run debt–output ratio, offsetting a lower capital income tax with either a higher labor income or consumption tax generally yields welfare gains.
Date: 2016
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https://doi.org/10.1111/iere.12199
Related works:
Working Paper: A Tale of Tax Policies in Open Economies (2016)
Working Paper: A Tale of Tax Policies in Open Economies (2015) 
Working Paper: A Tale of Tax Policies in Open Economies (2014)
Working Paper: A Tale of Tax Policies in Open Economies (2013)
Working Paper: A Tale of Tax Policies in Open Economies (2012) 
Working Paper: A Tale of Tax Policies in Open Economies (2012) 
Working Paper: A Tale of Tax Policies in Open Economies (2012) 
Working Paper: A Tale of Tax Policies in Open Economies (2011) 
Working Paper: A Tale of Tax Policies in Open Economies (2011) 
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Persistent link: https://EconPapers.repec.org/RePEc:wly:iecrev:v:57:y:2016:i:4:p:1299-1333
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