Examples in dynamic optimal taxation. (English) Zbl 1218.91126
Breton, Michèle (ed.) et al., Advances in dynamic games. Theory, applications, and numerical methods for differential and stochastic games. Dedicated to the memory of Arik A. Melikyan. Selected papers presented at the 13th international symposium on dynamic games and applications, Wrocław, Poland, Summer 2008. Boston, MA: Birkhäuser (ISBN 978-0-8176-8088-6/hbk; 978-0-8176-8089-3/ebook). Annals of the International Society of Dynamic Games 11, 509-520 (2011).
Summary: One famous result in the theory of capital income taxation is that the optimal tax is zero in equilibrium [C. Chamley, Econometrica 54, 607–622 (1986; Zbl 0601.90022); D. Judd, “Redistributive taxation in a simple perfect foresight model”, J. Public Econ. 28, 59–83 (1985)]. This result has been derived as an open-loop Stackelberg solution to an appropriate differential game. In this paper, we consider specific feedback solutions to three dynamic models of taxation and find that the optimal tax is generally different from zero.
For the entire collection see [Zbl 1207.91008].
For the entire collection see [Zbl 1207.91008].
MSC:
| 91B64 | Macroeconomic theory (monetary models, models of taxation) |
| 91A65 | Hierarchical games (including Stackelberg games) |
| 91A23 | Differential games (aspects of game theory) |
Citations:
Zbl 0601.90022References:
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| [8] | Rubio, SJ, On Coincidence of Feedback Nash Equilibria and Stackelberg Equilibria in Economic Applications of Differential Games, Journal of Optimization Theory and Applications, 128, 1, 203-221 (2006) · Zbl 1118.91023 · doi:10.1007/s10957-005-7565-y |
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