taxation of profits when there are profits abstract profits taxes fall on both pure profits and the use of capital as an input simulations of a cournot oligopoly suggest that gains from the former are not outweighed by losses from the latter

agricultural intensification irrigation and the environment in south asia issues and policy options high population pressure and the rapid pace of human activity including urbanization industrialization and other economic activities have led to a dwindling supply of arable land per capita and a process of agricultural intensification in south asia while this process has significantly increased food production to feed the growing population it has also entailed considerable damage to the physical environment including degradation and depletion of natural resources and unsustainable use of land and water resources this paper employs the analytical tools of economic theory environmental and ecological economics to model the impact of irrigation in south asia it underscores the need for an eclectic approach to policy responses stemming from private and common property rights theories externality theory and sustainability theory with a view to environmentalizing agricultural development

general equilibrium with price intervention policies a computational approach abstract three alternative formulations of general equilibrium under price intervention policies are presented in a computational framework in the first minimum or ceiling prices are supported by a government marketing agency revenues are recycled to consumers in the minimum price case and losses covered by lump sum taxes in the ceiling case similarities to general equilibrium with taxes are stressed in the second sector specific minimum prices are considered similar to harris todaro equilibria in the third government price supports operate through market interventions existence is discussed numerical examples presented and possible policy applications outlined

are consumption taxes really better than income taxes abstract we use political equilibrium theory and the neoclassical growth model to compare consumption and income tax systems if government outlays are used for redistribution through transfers then steady state equilibria in societies that use income taxes are not necessarily worse in welfare terms and may even be better income taxes are attractive precisely because they are more distortionary since this implies low equilibrium transfer levels we also find that switching tax systems typically does not benefit the median voter moreover a change from income to consumption taxes may make everybody worse off

a portfolio approach to endogenous growth equilibrium and optimal policy abstract this paper develops a portfolio approach to modeling endogenous growth in continuous time that is especially suitable for addressing fiscal and financial issues in policy design the analysis focuses on the equilibrium relationship between fiscal and financial policy rates of return and wealth allocation we analyze two models the first is based on the arrow romer model with increasing returns and an external effect of capital on labor productivity the second draws on barro s analysis of government spending and endogenous growth in both models we study the equilibrium allocation and discuss the optimal fiscal and financial policy

does size matter reassessing the relationship between aquaculture and poverty in bangladesh abstract aquaculture has long been promoted by development institutions in bangladesh on the understanding that it can alleviate poverty most of this attention has focused on forms of the activity commonly referred to as small scale this article draws on concepts from the literature on agricultural growth and elaborates a typology of aquaculture based on relations of production which suggests that in bangladesh quasi capitalist forms of aquaculture may possess greater potential to reduce poverty and enhance food security than the quasi peasant modes of production generally assumed to do so the implications of this conclusion are explored

applied general equilibrium models of taxation and international trade an introduction and survey we wish to acknowledge the help of three referees and of john pencavel on several earlier drafts as well as the assistance of the modelers whose work is referred to in the paper they corrected our lack of understanding of their work and provided many other helpful comments excellent research and bibliographical assistance have been provided by debbie fretz radwan shaban and janet stotsky helpful comments have been made by charles ballard michael boskin lans bovenberg sylvester damus harvey galper glenn harrison gordon lenjosek jack mutti serena ng t n srinivasan charles stuart and eric toder the authors also acknowledgefinancial support from the national bureau of economic research the national science foundation international business machines and the social sciences and humanities research council ottawa canada

an equilibrium model of the business cycle with household production and fiscal policy the authors estimate a dynamic general equilibrium model of the u s economy that includes an explicit household production sector and stochastic fiscal variables they use their estimates to investigate two issues first the authors analyze how well the model accounts for aggregate fluctuations they find that household production has a significant impact and reject a nested specification in which changes in the home production technology do not matter for market variables second the authors study the effects of some simple fiscal policy experiments and show that the model generates different predictions for the effects of tax changes than similar models without home production copyright 1997 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

environmentalizing economic development a south asian perspective south asia s pursuit of economic development has entailed considerable damage to and exposed the fragility of the physical environment of the region this paper provides an analytical overview of the of the environmental problem that manifest themselves in south asia in a comparative perspective with east and southeast asian countries as well as selected developed market economics to date south asian development process has been environment intensive and environment depleting it is argued that environmental problems are likely to set serious constraints to sustain growth in production to support a growing population by exploring the relationship between indices of human welfare and bio diversity conservation the paper exposes the dichotomy of the development process finally the study underscores the need for a range of policy options that rely both based and non market based instruments in an integrated setting to enviromnentalize south asian economic development c 2004 elsevier b v all rights reserved

optimal capital income taxation with incomplete markets borrowing constraints and constant discounting for a wide class of infinitely lived agent models chamley has shown that the optimal capital income tax rate is zero in the long run lucas has argued that for the u s economy there is a significant welfare gain from switching to this policy this paper shows that for the bewley class of models with incomplete insurance markets and borrowing constraints the optimal tax rate on capital income is positive even in the long run therefore cutting the capital income tax to zero may well lead to welfare losses

a note on dynamic tax incidence under certain reasonable conditions for a growth model the path of adjustment between steady states generated by a change in an exogenous policy variable is solved for explicitly the overall welfare effect is then shown to be a weighted average of the short and long run effects for a large class of social welfare functions these results are applied to a simple neoclassical growth model for the purpose of investigating the dynamic incidence of a labor income tax contrary to the claims of previous investigators the long run effect is shown to be more important for a wide range of parameter values

optimal taxation in models of endogenous growth we study the problem of optimal taxation in three infinite horizon representative agent endogenous growth models the first model is a convex model in which physical and human capital are perfectly symmetric our second model incorporates elastic labor supply through a lucas style technology analysis of these two models points out the danger of assuming that government expenditures are exogenous in our third model we include government expenditures as a productive input in capital formation showing that the limiting tax rate on capital is no longer zero in numerical simulations we find similar effects on growth and welfare in all three models

fiscal interactions and the case for carbon taxes over grandfathered carbon permits this paper provides simple formulas for adjusting the costs of carbon taxes and tradable carbon permits to account for interactions with pre existing tax distortions in the labour market both policies reduce labour supply as they increase product prices and reduce real household wages the resulting efficiency losses in the labour market can be substantial relative to partial equilibrium abatement costs however much of this added cost can be offset and perhaps more than offset when additional distortions from the tax system are considered if revenues from carbon taxes or auctioned permits are used to reduce distortionary taxes consequently there can be a strong case on efficiency grounds for using carbon taxes or auctioned permits over grandfathered carbon permits copyright 2003 oxford university press

optimal taxes without commitment abstract in the problem of optimal taxation in an economy with labor and capital the optimal solution when the government can commit to a sequence of tax rates entails that the tax on capital tends to zero in the limit with all the tax burden on labor it is well known however that this solution is time inconsistent so if the commitment power is not perfect this second best tax plan will not be sustainable we model explicitly the trade off between the cost of revising the tax plan and the benefit of the revision as a result when commitment is not possible both the limit tax rate and the steady state capital are different from their levels in the second best solution limit taxes on capital may be strictly positive but it may also be the case that the only sustainable plan has subsidies to capital the subsidies induce an overaccumulation of capital which becomes a commitment device against revisions of the tax plan journal of economic literature classification numbers h21 c73

nonoptimality of the friedman rule with capital income taxation this paper studies the efficient taxation of money and factor income in intertemporal optimizing growth models with infinite horizons transaction costs technologies and flexible prices second best optimality calls for a positive inflation tax and a non zero capital income tax when there are restrictions on taxation of production factors or profits rents our cases of nonoptimality of the friedman rule which differ from those of mulligan and sala i martin 1997 and extend substantially those of schmitt grohe and uribe 2004a follow from the violation of the diamond and mirrlees 1971 principle on production efficiency

consumption savings and investment by social class in bangladesh does the rural sector support the urban sector this article employs input output analysis and information from a social accounting matrix and the concept of net savings to examine savings consumption and investment behaviour by various social classes in bangladesh in urban and rural areas considerable differences between social classes can be identified in all three respects a majority of the social classes in the rural sector does not appear to generate enough savings to sustain its consumption whereas the urban social classes do there seems to be little difference in consumption pattern of the rural rich and the urban rich there is considerable urban rural difference in the import intensities of consumption the findings of this study based on the hazari model do not establish the existence of urban bias but the problem seems to be one of rich bias rather than urban bias per se however the hazari model cannot capture all possible sources of urban bias and circumstantial evidence indicates concentration of advantages in the urban areas

rents and the cost and optimal design of commodity taxes this paper numerically investigates the significance of rents for both the welfare costs and the optimal design of commodity taxes using a general equilibrium model calibrated to 1986 canadian data in the data we use ricardian rents are concentrated in agriculture and utilities with market structure rents concentrated in manufacturing different types of rents have different implications for the welfare cost of taxes and hence also for appropriate tax design ricardian rents lower the cost of taxes rents supported by imperfect competition with no free entry raise the cost of taxes rents supported by regulation generate rent seeking costs and if taxed improve resource allocation model results show a markedly nonuniform optimal tax structure and a substantial influence of the treatment of rents on the pattern of optimal tax rates by commodity

optimal fiscal policy in a business cycle model this paper develops the quantitative implications of optimal fiscal policy in a business cycle model in a stationary equilibrium the ex ante tax rate on capital income is approximately zero there is an equivalence class of ex post capital income tax rates and bond policies that support a given allocation within this class the optimal ex post capital tax rates can range from close to independently and identically distributed to close to a random walk the tax rate on labor income fluctuates very little and inherits the persistence properties of the exogenous shocks thus there is no presumption that optimal labor tax rates follow a random walk most of the welfare gains realized by switching from a tax system like that of the united states to the ramsey system come from an initial period of high taxation on capital income

technical change and labor absorption in asian agriculture some emerging trends abstract increased labor absorption in agriculture has been widely held to be the key to solving unemployment problems in developing asia following the historical experience of east asian countries the new seed fertilizer technology interacting with expansion of irrigation and cropping intensity initially increased labor absorption in wheat and rice production however evidence from recent village studies indicates that new labor saving chemical and mechanical innovations originating in the developed countries are being rapidly adopted by farmers of the developing countries owing to their private cost reducing characteristics this international transfer of technology contributes to increased productivity but results in net reductions of agricultural labor use recognition of the declining capacity of the agricultural sector for labor absorption indicates the need to seek solutions to unemployment problems in the off farm sector

a quantitative analysis of capital income taxation this paper studies the quantitative impact of eliminating capital income taxation on capital accumulation and steady state welfare in a general equilibrium model with overlapping generations of sixty five period lived individuals who face idiosyncratic earnings risk borrowing constraints and life span uncertainty under a wide range of parameter configurations the capital income tax rate that maximizes steady state welfare is positive even though eliminating it completely would raise the steady state capital stock toward the golden rule this is because the tax burden is shifted toward the younger and liquidity constrained years reducing the individuals ability to self insure copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

redistributive taxation in a simple perfect foresight model abstract we investigate the redistributive potential of capital taxation in an intertemporal maximizing model of capital formation first even unanticipated redistributive capital taxation is severely limited in its effectiveness since it depresses wages second under any convergent redistributive tax policy which maximizes a paretian social objective the capital income tax will converge to zero independent of the factor supply elasticities these results are independent of workers holdings of capital

labor absorption and agricultural development bangladesh s experience and predicament significant employment gains have resulted from the green revolution technologies in bangladesh while the kharif wet season employment has remained more or less stagnant employment in the rabi dry season increased fourfold between the early 1960s and the late 1980s with overall crop sector employment increasing by 30 interseasonal differences in employment have declined steadily the employment generating effect of the green revolution is slowing down i e agricultural growth at the margin has become progressively less labor intensive in recent years changes in the occupational structure may merely reflect a relocation of surplus labor from the farm to the nonfarm sector where it is also largely surplus rather than heralding a real turning point in bangladesh there is little prospect of agriculture providing much greater employment and there is little sign that labor transfer in bangladesh will lead to a pattern of successful industrialization as in the contemporary developed countries of east asia or the western countries

the determinants of cognitive and non cognitive educational outcomes empirical evidence in spain using a bayesian approach abstractthis article aims to extend the literature about the role played by socio economic and family background in educational outcomes by comparing the determinants of two different dimensions of educational output academic achievement and non cognitive traits to do this we explore the information provided by a self report survey developed specifically for the purpose of this research this will provide us with an innovative measure of non cognitive performance based on particular personal traits such as responsibility effort motivation and critical capacity as well as a common measure of cognitive proficiency we use a bayesian approach to estimate the potential influence of multiple individual and family variables on both dimensions of educational output from our results we find that despite some similarities there are several important divergences with regard to some socio economic variables that have been traditionally considered to be the most influential determinants of academic achieve

indivisible labor lotteries and equilibrium abstract this paper considers an economy where labor is indivisible and agents are identical although the discontinuity in labor supply at the individual level disappears as a result of aggregation it is shown that indivisible labor has strong consequences for the aggregate bahavior of the economy it is also shown that optimal allocations involve lotteries over employment and consumption

endogenous market structures and optimal taxation this article provides optimal labour and dividend income taxation in a general equilibrium model with oligopolistic competition and endogenous firms entry in the long run the optimal dividend income tax corrects for inefficient entry the dividend income tax depends on the form of competition and the nature of the sunk entry costs in particular it is higher in market structures characterised by competition in quantities rather than those characterised by price competition oligopolistic competition leads to an endogenous countercyclical price markup as a result offsetting the distortions over the business cycle requires deviations from full tax smoothing

effective tax rates in macroeconomics cross country estimates of tax rates on factor incomes and consumption abstract this paper proposes a method for computing tax rates using national accounts and revenue statistics using this method we construct time series of tax rates for large industrial countries the method identifies the revenue raised by different taxes at the general government level and defines aggregate measures of the corresponding tax bases this method yields estimates of effective tax rates on factor incomes and consumption consistent with the tax distortions faced by a representative agent in a general equilibrium framework these tax rates compare favorably with existing estimates of marginal tax rates and highlight important international differences in tax policy

indivisible labor and the business cycle abstract a growth model with shocks to technology is studied labor is indivisible so all variability in hours worked is due to fluctuations in the number employed we find that unlike previous equilibrium models of the business cycle this economy displays large fluctuations in hours worked and relatively small fluctuations in productivity this finding is independent of individuals willingness to substitute leisure across time this and other findings are the result of studying and comparing summary statistics describing this economy an economy with divisible labor and post war u s time series

indeterminacy and increasing returns abstract we investigate properties of the one sector growth model with increasing returns under two organizational structures capable of reconciling the existence of aggregate increasing returns with competitive behavior by firms the first involves input externalities the second involves monopolistic competition we show for parameters in close accord with recent literature on real business cycles that the model displays an indeterminate steady state that can be exploited to generate a model of business fluctuations driven by self fulfilling beliefs in our first class of models growth is generated by exogenous increases in factor productivity in the second class the marginal product of capital is large enough for endogenous growth journal of economic literature classification numbers e00 e3 o40

does grade retention affect students achievement some evidence from spain grade retention practices are at the forefront of the educational debate in this article we measure the effect of grade retention on spanish students achievement by using data from programme for international student assessment pisa we find that grade retention has a negative impact on educational outcomes but we confirm the importance of endogenous selection which makes observed differences between repeaters and nonrepeaters appear about 14 lower than they actually are the effect on scores of repeating is much smaller 10 of nonrepeaters average than the counterfactual reduction that nonrepeaters would suffer had they been retained as repeaters 24 of their average furthermore those who repeated a grade during primary education suffered more than those who repeated a grade in secondary school although the effect of repeating at both times is as expected larger

lobbying and the measurement of conventional welfare cost it is widely accepted that the welfare cost of distortionary policy has two components the first component is the conventional welfare cost of lost economic surplus due to an inefficient allocation of resources the second component is the rent seeking cost associated with efforts to influence policy if the policy in question is an excise tax the partial equilibrium measure of conventional welfare cost is the harberger triangle of lost consumer and producer surpluses partial equilibrium rent seeking costs are measured by the amount spent to influence policy total welfare cost is the sum of the two measurements while how one determines and thus measures the equilibrium amount of rent seeking is the subject of much debate and modelling the measurement of conventional welfare cost is not controversial 1 furthermore conventional welfare costs are treated as independent of the manner in which rent seeking occurs for example consider the welfare cost of monopoly see tullock 1967 or posner 1975 the portion o f the total welfare cost due to underproduction is measured by the harberger triangle of lost surplus whatever the method by which monopoly rights are obtained the benefits of rent seeking accrue entirely to the holder of the monopoly right any rent seeking expenses are treated as fixed costs with no effect on the monopolist s output decision the form that rent seeking takes is irrelevant to the measurement of conventional welfare cost in other cases the form rent seeking takes is relevant consider a multi firm industry subjected to an excise tax if effective lobbying requires a collective lobbying effort and if a firm s share of the industry s rent seeking expenses vary with a firm s output rent seeking will affect the firm s and industry s marginal cost functions the impact of rent seeking on marginal cost if overlooked leads to mismeasurement of conventional welfare cost and thus the total welfare cost of the policy moreover the direction of measurement error

from the static to the dynamic some problems in the theory of taxation abstract this paper considers problems and issues that arise when we attempt to extend the static theory of taxation and production planning to a dynamic context and to combine that theory with theories of growth the reasons dynamic theory is less developed include problems with the analytical tractability of even those dynamic models which attempt to retain the basic structure of the static model furthermore difficult and interesting issues arise in a dynamic context which are either not present or are much less severe in the static theory special attention is paid to these new issues and the difficulties they pose

subsidization and stabilization optimal employment policy under aggregate uncertainty the authors study an economy where externalities provide an explicit role for intervention and technology shocks generate aggregate uncertainty in laissez faire there is too much unemployment however the authors show how to support the optimal allocation as a decentralized equilibrium using a self financing linear employment subsidy generally this subsidy is a function of economic conditions and they characterize the way in which it varies with the shock a special case of the authors results indicates that a simple restriction on technology homotheticity implies the optimal subsidy is constant or independent of unemployment copyright 1991 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

identification of key sectors in the bangladesh economy a linkage analysis approach this paper purports to identify key sectors in the bangladesh economy employing the concepts of forward and backward linkages an attempt is made to rank sectors according to their employment and output potentials the paper draws a distinction between gross and net linkages defined respectively on the inverses of the leontief technology matrix and the domestic matrix using data for bangladesh it is shown that the transition from gross to net linkages implies significant divergence in sectoral rankings this appears to be true for ranking of sectors in terms of output and employment suggesting a potential conflict between employment and output generation potentials particularly in the industrial sectors when net linkages are considered agricultural sectors appear to rank high on both counts

on the optimal taxation of capital income abstract we show that in models in which labor services are supplied jointly with human capital the chamley and judd result on zero capital income taxation in the limit extends to labor taxes as long as accumulation technologies are constant returns to scale moreover for a class of widely used preferences consumption taxes are zero in the limit as well however we show by the construction of two examples that these results no longer hold for certains types of restrictions on tax rates or if there are profits generated journal of economic literatureclassification numbers e62 h21

optimal taxation and spending in general competitive growth models abstract we find that the optimal long run tax on capital income is zero even if the capital stock does not converge to a steady state nor to a steady state growth rate the optimal tax on human capital is also zero if human capital is not a final good but the long run wage tax is not generally zero we argue that consumption tax proposals such as the flat tax are not consumption taxes and are biased against human capital

optimal taxes and the structure of preferences if optimal tax theory is to be the basis for calculating tax rates a close understanding is required of the relationship between the structure of preferences and the configuration of optimal tax rates otherwise hypotheses chosen by the econometrician for practical convenience may completely determine the results independently of measurement this paper explores the relationship between various types of separability particularly weak and implicit separability and optimal tax rates in the various models discussed in the literature the use of distance functions and the antonelli matrix provides a significant unification of previously disparate results in the final analysis optimal tax theory should be the basis for actual calculation of tax rates although recently there have been great advances in theoretical results and in our understanding of their meaning we are still some way from a working knowledge of whether uniform commodity taxes are in practice optimal or if not which commodities should be discriminated against present theoretical formulae do not yield clear cut results except in special cases and it has recently become clear that optimal rates depend crucially on the detailed structure of consumer preferences for example atkinson and stiglitz 3 show that with an optimal nonlinear income tax discriminatory commodity taxes are only necessary to the extent that individual commodities are not weakly separable from leisure more recently deaton 6 has shown that a similar result holds for what is perhaps the most interesting of the standard models that where there are many consumers and only a linear income tax and proportional commodity taxes are allowed in this case separability between goods and leisure together with linear engel curves for goods removes the need for differential commodity taxation in consequence nothing can be learned about commodity taxes from consumer demand studies in which commodity demands are explained conditionally on total expenditure and commodity prices and which assume linear engel curves all such studies require separability from leisure as a maintained hypothesis and so are consistent with uniform commodity taxation these results suggest that the prospects for meaningful empirical calculations of tax rates are bleak econometricians estimating commodity demand and labor supply equations make generous use of separability assumptions to enable estimation at all in consequence it is likely that empirically calculated tax rates based on econometric estimates of parameters will be determined in structure not by the measurements actually made but by arbitrary untested and even unconscious hypotheses chosen by the econometrician for practical convenience to remedy this situation and as a prelude to fruitful empirical work it is necessary to have a more explicit understanding of how preference structure affects optimal tax rates such is the object of this paper three different

market analysis technical change and income distribution in semi subsistence agriculture the case of bangladesh for the first time the model developed by hayami and herdt is applied to determine gains from modern varieties of rice in bangladesh and the distribution of these gains between consumers and producers the results suggest that consumers surplus is much greater than it would have been had the high yielding crop varieties hyvs not been introduced by keeping the real price lower than it would have been otherwise the modern varieties have tended to be income equalizing for urban consumers the hayami herdt partial model even suggests that given the relatively inelastic demand for rice in bangladesh the real cash income of producers has risen slightly as a result of these new technologies in reality however the impact of these changes on incomes of farmers and the distribution of income between those involved in production is more complex it is suggested that if a less partial view is taken and if account is taken of lower cost of obtaining home consumed produce the increase in income may be greater in any event there are dangers in using such a partial model to predict the developmental consequences of technological changes affecting a staple crop and attention needs also to be given to the possibility that the supply curve may not have the simple form and pivot in the way supposed by hayami and herdt while the hayami herdt model is simple to apply it is best used as a first approximation or starting point rather than a final solution it ignores a number of criteria that could be important in assessing new agricultural technologies such as their impact on the variability of benefits to producers and consumers and their consequences for sustainability of production furthermore the hayami herdt model does not deal specifically with changes in factor shares in farm production nor does it consider the impact on income distribution of the ownership and control of critical input like irrigation and imperfection in the rural credit market it is pointed out in our paper that the adoption of hyvs has been associated with important variations in factor shares in bangladeshi rice production analysis of available farm level data indicates that the relative share of labour has fallen suggesting an uneven distribution of gains from technological changes between the owners of non labour resources and those of labour resources however the absolute share of labour has increased and it seems that rural employment has risen as result of the new technologies

capital income taxation and perfect foresight abstract this paper develops a perfect foresight model of capital income taxation in a representative household neoclassical one sector framework the household sector is based on intertemporal utility maximization the main result is the equivalence of a perfect foresight solution and an artificial central planning solution if there is no tax this is the equivalence of a market equilibrium and social optinum the equivalence result is used to deduce the implications of a partial tax reform policy it is shown that a partial reform increases capital at each time following the initial period of the program

model averaging in economics an overview standard practice in empirical research is based on two steps first researchers select a model from the space of all possible models second they proceed as if the selected model had generated the data therefore uncertainty in the model selection step is typically ignored alternatively model averaging accounts for this model uncertainty in this paper i review the literature on model averaging with special emphasis on its applications to economics finally as an empirical illustration i consider model averaging to examine the deterrent effect of capital punishment across states in the usa

the welfare cost of capital income taxation in a growing economy the welfare cost of capital income taxation is analyzed in a general equilibrium framework where the private sector is represented by a competitive household endowed with perfect foresight and an infinite life the value of the welfare cost depends essentially on the elasticity of substitution between capital and labor in the production function numerical estimates are presented for different values of the parameters of the model the welfare gain obtained by the abolition of the capital income tax is smaller when the private sector is not endowed with perfect foresight it is reduced by about 40 percent when expectations are myopic the allocation efficiency cost of the corporate tax dwarfs the intertemporal welfare cost

optimal taxation of capital income with imperfectly competitive product markets abstract we show that the steady state optimal tax on capital income can be negative positive or zero in a neoclassical growth model that allows for imperfectly competitive product markets the sign of the optimal tax rate depends crucially on 1 the degree of monopoly power 2 the extent to which monopoly profits can be taxed 3 the size of the depreciation allowance and 4 the magnitude of government expenditures for an empirically plausible set of parameters we find that the steady state optimal capital tax can range between 10 and 22

optimal taxation of capital income in general equilibrium with infinite lives this paper analyzes the optimal tax on capital income in general equilibrium models of the second best agents have infinite lives and utility functions which are extensions from the koopmans form the population is heterogeneous the important property of the models is the equality between the social and the private discount rates in the long run i find that the optimal tax rate is zero in the long run for a special case of additively separable utility functions i then determine the tax rates along the dynamic path and conditions that are sufficient for the local stability of the steady state

the welfare cost of factor taxation in a perfect foresight model this paper examines the marginal efficiency cost of various factor taxes in a dynamic general equilibrium model the au thor solves for the excess burden of anticipated and unanticipated t emporary and permanent tax policies using a range of estimates for taste and technology parameters he finds excess burdens larger than those indicated by previous studies that use static models these exc ess burdens are sensitive to parameter values and timing however th e rankings of alternative tax policies turn out to be insensitive to structural parameter values copyright 1987 by university of chicago press

ramsey tax rules for economies with imperfect competition abstract this paper derives optimal commodity tax rules for a general equilibrium model with imperfect competition to achieve this functions are constructed that describe the effects of taxation upon the equilibrium prices and profit levels of imperfectly competitive industries the use of these functions allows existing tax rules to be generalised to accommodate imperfect competition

cyclical and noncyclical redistributive taxation consider the optimal time path of a tax on capital income the proceeds of which are transferred to labor in a lump sum it is known from earlier open loop formulations that if the optimal rate of tax converges to a point it converges to zero implying that in the long run a tax on capital income can do nothing for social welfare it is now shown that the optimal rate of tax need not converge to zero and in the case of feedback formulations that it may converge to a positive or negative number or to a limit cycle copyright 1993 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

green gold burley tobacco smallholder agriculture and poverty alleviation in malawi abstract the abolition in 1990 of the estate monopoly on cultivation of burley tobacco is expected to play an important role in reducing poverty among smallholders in malawi a nationwide survey in 1993 shows that smallholder households cultivating burley also grow more hybrid maize use more fertilizer and are more food secure but resource poor households particularly those headed by women face land and labor constraints on burley adoption burley and hybrid maize increase the demand for hired labor but not enough to absorb the growth in the rural labor force broad based poverty alleviation requires technology and programs targeted at the majority of smallholders with holdings of 0 5 hectares or less

endogenous capital utilization investor s effort and optimal fiscal policy abstract the present paper studies the implications of endogenous capital utilization and investor s effort on the structure and time consistency of optimal fiscal policy the main results are that levies of old capital are distortionary and should therefore not be used at confiscatory rates that in a steady state capital and labor income should be taxed at the same rate and investment should be subsidized at the same rate as the tax rate and that the optimal tax policy can be made time consistent through debt restructuring

optimal redistributive capital taxation in a neoclassical growth model abstract this paper provides a counterexample to the simplest version of the redistribution models considered by judd 1985 in which the government chooses an optimal distortionary tax on capitalists to finance a lump sum payment to workers i show that the steady state optimal tax on capital income is generally non zero when the capitalists utility is logarithmic and the government faces a balanced budget constraint with log utility agents optimal decisions depend solely on the current rate of return not any future rates of return or tax rates this feature of the economy effectively deprives the government of a useful policy instrument because promises about future tax rates can no longer influence current allocations when combined with a lack of other suitable policy instruments such as government bonds the result is an inability to decentralize the allocations that are consistent with a zero limiting capital tax i show that the standard approach to solving the dynamic optimal tax problem yields the wrong answer in this knife edge case because it fails to properly enforce the constraints associated with the competitive equilibrium specifically the standard approach lets in an additional policy instrument through the back door

the international ramifications of tax reforms supply side economics in a global economy this paper studies tax reforms in a dynamic model of a global economy calibrated to current u s and european tax policies world capital markets add consumption smoothing and income redistribution effects that alter closed economy predictions in the absence of taxes on foreign interest welfare gains of eliminating u s income taxes are enlarged by up to 34 percent at the expense of european losses caused by transitional declines in consumption and leisure and a permanent capital outflow in contrast if foreign interest is taxed the same tax reform reduces u s welfare 0 7 percent and increases european welfare 1 8 percent copyright 1998 by american economic association