1,233 research outputs found
The jointly optimal inflation tax, income tax structure, and transfers
The welfare-maximizing income tax structure, rate of money creation, and amounts of intergenerational transfers are jointly determined for given rates of government consumption. When government consumption is zero, it is found for the parameter values examined that the income tax structure is progressive, the rate of money change is negative, and positive transfers are made to the old. As government consumption increases, the tax structure's progressivity declines and turns increasingly regressive, the rate of money change rises, and transfers decrease. It is found that the bulk of the increase in government consumption is optimally financed by a cut in transfers.Expenditures, Public ; Income tax
How little we know about budget policy effects
Using a simple model, we show why previous empirical studies of budget policy effects are flawed. Due to an identification problem, those studiesβ findings can be shown to be consistent with either policies mattering or not.Budget
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