Optimal Taxation with Incomplete Markets
Thomas Sargent,
Mikhail Golosov,
David Evans and
Anmol Bhandari
Additional contact information
David Evans: New York University
Anmol Bhandari: New York University
No 1276, 2014 Meeting Papers from Society for Economic Dynamics
Abstract:
This paper characterizes tax and debt dynamics in Ramsey plans for incomplete markets economies that generalize an Aiyagari et al. (2002) economy by allowing a single asset traded by the government to be risky. Long run debt and tax dynamics can be attracted not only to the first-best continuation allocations discovered by Aiyagari et al. for quasi-linear preferences, but instead to a continuation allocation associated with a level of (marginal-utility-scaled) government debt that would prevail in a Lucas-Stokey economy that starts from a particular initial level of government debt. The paper formulates, analyzes, and numerically solves Bellman equations for two value functions for a Ramsey planner, one for t ≥ 1, the other for t = 0.
Date: 2014
New Economics Papers: this item is included in nep-dge, nep-mfd, nep-pbe, nep-pub and nep-upt
References: Add references at CitEc
Citations: View citations in EconPapers (1)
Downloads: (external link)
https://red-files-public.s3.amazonaws.com/meetpapers/2014/paper_1276.pdf (application/pdf)
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:red:sed014:1276
Access Statistics for this paper
More papers in 2014 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann (chuichuiche@gmail.com).