Welfare Effects of Tax Policy in Open Economies: Stabilization and Cooperation

Sunghyun Kim () and Jinill Kim

No 399, Econometric Society 2004 Far Eastern Meetings from Econometric Society

Abstract: This paper studies an international tax policy design problem by employing a two-country dynamic general equilibrium model with incomplete asset markets. We investigate the possibility of welfare-improving active tax policies, in particular capital and labor income tax, under the non-cooperative Nash equilibrium and the cooperative equilibrium. Unlike the conventional wisdom regarding stabilization policies, optimal tax policies in our economy are procyclical. Relative to the non-cooperative setting, international tax policy cooperation requires more active tax policies (about two times) and generates large extra welfare gains (by about a th

Keywords: income tax; welfare; stabilization; cooperation (search for similar items in EconPapers)
JEL-codes: E6 F4 (search for similar items in EconPapers)
Date: 2004-08-11
New Economics Papers: this item is included in nep-dge and nep-pub
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Welfare Effects of Tax Policy in Open Economies: Stabilization and Cooperation (2018)
Working Paper: Welfare Effects of Tax Policy in Open Economies: Stabilization and Cooperation (2006)
Working Paper: Welfare Effects of Tax Policy in Open Economies: Stabilization and Cooperation (2005)
Working Paper: Welfare effects of tax policy in open economies: stabilization and cooperation (2003)
Working Paper: Welfare Effects of Tax Policy in Open Economies: Stabilization and Cooperation (2003)
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