The Friedman rule in an overlapping-generations model with nonlinear taxation and income misreporting

Firouz Gahvari and Luca Micheletto

No 2012:9, Working Paper Series, Center for Fiscal Studies from Uppsala University, Department of Economics

Abstract: This paper models an overlapping-generations economy that includes money and is populated with individuals of different skills. They face a nonlinear income tax schedule and can engage in tax evasion. Money serves two purposes: the traditional one, modeled through a money-in-the-utility-function, and to facilitate tax evasion. It shows that income tax evasion leads to the violation of the Friedman rule that will otherwise hold.

Keywords: Monetary policy; fiscal policy; redistribution; the Friedman rule; tax evasion; overlapping-generations; second best (search for similar items in EconPapers)
JEL-codes: E52 H21 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2012-06-27, Revised 2014-06-05
New Economics Papers: this item is included in nep-dge, nep-iue, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published as Gahvari, Firouz and Luca Micheletto, 'The Friedman rule in an overlapping-generations model with nonlinear taxation and income misreporting' in Journal of Public Economics , 2014, pages 10-23.

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Journal Article: The Friedman rule in an overlapping-generations model with nonlinear taxation and income misreporting (2014)
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