Optimal taxation in infinitely-lived agent and overlapping generations models: a review


Erosa, Andrés and Gervais, Martin (2001) Optimal taxation in infinitely-lived agent and overlapping generations models: a review. Economic Quarterly, 87, (2), 23-44.

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Description/Abstract

A survey of the literature on optimal taxation both in infinitely-lived agent models and life-cycle economies suggests that no consensus emerges regarding the optimal tax rate on capital income. Although the tax rate is invariably zero in the long-run steady state of infinitely-lived agent models, this same zero-tax prescription holds for life-cycle economies only under extremely stringent conditions. Both models suggest that capital income should be taxed at non-zero rates during the transition to long-run equilibrium unless individuals have separable preferences between consumption and leisure.

Item Type: Article
ISSNs: 1069-7225 (print)
Related URLs:
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HJ Public Finance
Divisions: University Structure - Pre August 2011 > School of Social Sciences > Economics
ePrint ID: 47644
Date Deposited: 07 Aug 2007
Last Modified: 27 Mar 2014 18:31
URI: http://eprints.soton.ac.uk/id/eprint/47644

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