 Implementing the best steady state with savings in unbacked risky assetsPSE-Ecole d'économie de Paris (Postprint) from HAL Abstract: This paper shows, in an overlapping generations economy à la Diamond (1965), that when savings in an unbacked asset (e.g. at money) bear some risk of becoming suddenly worthless, the market does not implement the best steady state attainable with that asset. Nonetheless, in the absence of an absolutely riskless at money and excluding resorting to redistributive scal policies that would allow to attain the rst-best steady state, this best monetary steady state can be implemented as a competitive equilibrium with the adequate policy of taxes on returns to capital, subsidies to returns to monetary savings, and lump-sum transfers. The policy is, at the steady state, balanced every period and non-redistributive. Keywords: asset bubble; overlapping generations; Taxation of savings (search for similar items in EconPapers) Published in Macroeconomic Dynamics, 2013, 17 (4), pp.779-801. ⟨10.1017/S1365100511000666⟩ There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:halshs-00667423 DOI: 10.1017/S1365100511000666 Access Statistics for this paper More papers in PSE-Ecole d'économie de Paris (Postprint) from HAL |
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