Αρχική Σελίδα Αρχική Σελίδα
  Rss Feeds

TIME-CONSISTENT FISCAL POLICY UNDER HETEROGENEITY: CONFLICTING OR COMMON INTERESTS?

 

Konstantinos Angelopoulos

University of Glasgow

 

James Malley

University of Glasgow and CESifo

 

Apostolis Philippopoulos

Athens University of Economics & Business, CESifo

 

Abstract

This paper studies the aggregate and distributional implications of Markov-perfect tax-spending policy in a neoclassical growth model with capitalists and workers. Focusing on the long run, our main findings are: (i) it is optimal for a benevolent government, which cares equally about its citizens, to tax capital heavily and to subsidize labour; (ii) a Pareto improving means to reduce inefficiently high capital taxation under discretion is for the government to place greater weight on the welfare of capitalists; (iii) capitalists and workers preferences, regarding the optimal amount of "capitalist bias", are not aligned implying a conflict of interests.

JEL Classification: E62, H21

Keywords: Optimal fiscal policy, Markov-perfect equilibrium, heterogeneous agents

Acknowledgements: We would like to thank Kevin Lansing for helpful comments and suggestions. We are grateful for financial support from the ESRC, Grant No. RES-062-23-2292, but the views expressed here are entirely our own.

 

 

Correspondence:

Jim Malley,

Department of Economics,

University of Glasgow,

Adam Smith Building, Glasgow G12 8RT.

 E-mail: jim.malley@glasgow.ac.uk.


Πλήρες Κείμενο