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|Title:||Time-consistent fiscal policy under heterogeneity: Conflicting or common interests? |
Malley, James R.
|Issue Date:||2011 |
|Series/Report no.:||CESifo working paper: Fiscal Policy, Macroeconomics and Growth 3444|
|Abstract:||This paper studies the aggregate and distributional implications of Markov-perfect taxspending policy in a neoclassical growth model with capitalists and workers. Focusing on the long run, our main findings are: (i) it is optimal for a benevolent government, which cares equally about its citizens, to tax capital heavily and to subsidise labour; (ii) a Pareto improving means to reduce inefficiently high capital taxation under discretion is for the government to place greater weight on the welfare of capitalists; (iii) capitalists and workers preferences, regarding the optimal amount of 'capitalist bias', are not aligned implying a conflict of interests.|
|Subjects:||optimal fiscal policy|
|Document Type:||Working Paper|
|Appears in Collections:||CESifo Working Papers, CESifo Group Munich|
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