Working Paper
Tax Structure, Welfare, and the Stability of Equilibrium in a Model of Dynamic Optimal Fiscal Policy
A demonstration that the assumed structure of taxation can have dramatic effects on economic welfare and on the stability of the steady state in a dynamic general-equilibrium model of optimal fiscal policy. The authors find that household welfare is highest under a structure that includes separate tax rates on labor and capital incomes, double taxation of dividends, and tax-deductible depreciation.
Suggested Citation
Guo, Jang-Ting, and Kevin Lansing. 1994. “Tax Structure, Welfare, and the Stability of Equilibrium in a Model of Dynamic Optimal Fiscal Policy.” Federal Reserve Bank of Cleveland, Working Paper No. 94-10. https://doi.org/10.26509/frbc-wp-199410
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