Tax Policy

Toshihiro Ihori
Additional contact information
Toshihiro Ihori: University of Tokyo

Chapter 3 in Public Finance in an Overlapping Generations Economy, 1996, pp 42-72 from Palgrave Macmillan

Abstract: Abstract In Chapter 3, we investigate normative aspects of tax policy in an overlapping generations growth model. The set of commodity taxes that minimizes the deadweight loss is called Ramsey taxes. The Ramsey rule has a simple form (see Chapter 1). Under certain simplifying conditions, Ramsey taxes are proportional to the sum of the reciprocal of the elasticity of demand and supply. The tax rate should be set so that the increase in deadweight loss per extra dollar raised is the same for each commodity. The Ramsey rule is a useful criterion for static efficiency. In Chapter 2, on the other hand, we have shown that the golden rule is a useful criterion for dynamic efficiency. Thus, this chapter investigates the relationship between the Ramsey rule and the golden rule when lump-sum taxes are not available in the overlapping generations growing economy.

Keywords: Capital Income; Labor Income; Golden Rule; Government Budget Constraint; Ramsey Rule (search for similar items in EconPapers)
Date: 1996
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-38990-8_3

Ordering information: This item can be ordered from
http://www.palgrave.com/9780230389908

DOI: 10.1057/9780230389908_3

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().