Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/316597 
Authors: 
Year of Publication: 
2021
Citation: 
[Journal:] East Asian Economic Review (EAER) [ISSN:] 2508-1667 [Volume:] 25 [Issue:] 4 [Year:] 2021 [Pages:] 361-401
Publisher: 
Korea Institute for International Economic Policy (KIEP), Sejong-si
Abstract: 
This paper sets up a two agent small open economy with monopolistically competitive firms and catching up with the Joneses to investigate the labor and capital Laffer curve, taking into account aging population along the line of Auray et al. (2016), Galí and Monacelli (2005), and Trabandt and Uhlig (2011). The paper finds that the higher the market power of firms is, the larger the consumption inequality between asset holders and non-asset holders is in the economy with aging population. It also finds that there is room for government to increase the tax revenue by raising tax rates under the economy with higher markup, as households will work more hours to compensate for their loss of labor income to tax hikes. The expected maximum tax revenue is likely to shrink with progressive taxations, since non-asset holders with additional dividend income work less and consume more. The paper finds that the fiscal multiplier decreases with the degree of progressive redistribution.
Subjects: 
Aging
Laffer Curve
Open Economy
Taxes
Two Agent
JEL: 
E60
J11
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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