search query: @indexterm TAX POLICY / total: 92
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Author: | Pearce, D. Stacchetti, E. |
Title: | Time consistent taxation by a government with redistributive goals |
Journal: | Journal of Economic Theory
1997 : FEB, VOL. 72:2, p. 282-305 |
Index terms: | TAXATION GOVERNMENT GOALS DISTRIBUTION TAX POLICY |
Language: | eng |
Abstract: | Time consistency problems arise even if the government has access to nondistortionary tax instruments, in a dynamic economy whose government is interested in equity and efficiency. In production moral hazard leads to a nondegenerate distribution of income which the government would like to flatten ex post. Self-enforcing social agreements can mitigate the tendency toward excessive redistribution. The nature of distortions caused by the time consistency problem is investigated, and it is shown that in the constrained-optimal equilibrium usually a linear tax schelude is imposed. |
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