Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/191596 
Year of Publication: 
2019
Citation: 
[Journal:] Journal of Economics and Econometrics [ISSN:] 2032-9660 [Issue:] Forthcoming [Publisher:] The Economics and Econometrics Research Institute [Place:] Brussels [Year:] 2019
Publisher: 
The Economics and Econometrics Research Institute, Brussels
Abstract: 
We show that in a exogenous growth model with non-market ("home") sector calibrated to Bulgarian data under the progressive taxation regime (1993-2007), the economy exhibits equilibrium indeterminacy due to the presence of non-market production. These results are in line with the findings in Benhabib and Farmer (1994, 1996) and Farmer (1999). Also, the findings in this paper are in contrast to Guo and Lansing (1988) who argue that progressive taxation works as an automatic stabilizer. Under the flat tax regime (2008-16), the economy calibrated to Bulgarian data displays saddle-path stability. The decrease in the average effective tax rate addresses the indeterminacy issue and eliminates the "stable focus" dynamics.
Subjects: 
Progressive taxation
Non-market sector
Home production
Equilibrium (In)determinacy
JEL: 
J46
D91
O41
Document Type: 
Article
Document Version: 
Accepted Manuscript (Postprint)
Appears in Collections:

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.