@techreport{Gottardi2011Optimal,
abstract = {We study the dynamic Ramsey problem of finding optimal public debt and linear taxes on capital and labor income within a tractable infinite horizon model with incomplete markets. With zero public expenditure and debt, it is optimal to tax the risky labor income and subsidize capital, while a positive amount of public debt is welfare improving. A steady state optimality condition is derived which implies that the tax on capital is positive, when savings are sufficiently inelastic to returns. A calibration of our model to the US economy indicates positive optimal taxes and a small but positive optimal debt level.},
address = {M\"{u}nchen},
author = {Piero Gottardi and Atsushi Kajii and Tomoyuki Nakajima},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {D52; D60; D90; E20; E62; H21; O40; 330; incomplete markets; Ramsey equilibrium; optimal taxation; optimal public debt; constrained inefficiency; Optimale Besteuerung; \"{O}ffentliche Schulden; Optimales Wachstum; Unvollkommener Markt; Theorie},
language = {eng},
number = {3560},
publisher = {CESifo},
title = {Optimal taxation and constrained inefficiency in an infinite-horizon economy with incomplete markets},
type = {CESifo working paper: Fiscal Policy, Macroeconomics and Growth},
url = {http://hdl.handle.net/10419/49512},
year = {2011}
}
