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The Economic Effects of Production Taxes in a Stochastic Growth Model

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  • Dotsey, Michael

Abstract

This paper analyzes the effects of stochastic taxes on production in simple stochastic growth model. In so doing, the paper explicitly examines the importance of uncertainty on the decisions of individual agents. This importance is emphasized by comparing economic outcome to various realizations of tax rates under uncertainty and perfect foresight. Copyright 1990 by American Economic Association.

Suggested Citation

  • Dotsey, Michael, 1990. "The Economic Effects of Production Taxes in a Stochastic Growth Model," American Economic Review, American Economic Association, vol. 80(5), pages 1168-1182, December.
    • Handle: RePEc:aea:aecrev:v:80:y:1990:i:5:p:1168-82
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    Citations

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    Cited by:

    1. Ludvigson, Sydney, 1996. "The macroeconomic effects of government debt in a stochastic growth model," Journal of Monetary Economics, Elsevier, vol. 38(1), pages 25-45, August.
    2. Panteghini Paolo, 2001. "On Corporate Tax Asymmetries and Neutrality," German Economic Review, De Gruyter, vol. 2(3), pages 269-286, August.
    3. Richter, Alexander W. & Throckmorton, Nathaniel A., 2015. "The consequences of an unknown debt target," European Economic Review, Elsevier, vol. 78(C), pages 76-96.
    4. Chang, Ly-June, 1995. "Business cycles with distorting taxes and disaggregated capital markets," Journal of Economic Dynamics and Control, Elsevier, vol. 19(5-7), pages 985-1009.
    5. Davig, Troy & Leeper, Eric M. & Walker, Todd B., 2010. ""Unfunded liabilities" and uncertain fiscal financing," Journal of Monetary Economics, Elsevier, vol. 57(5), pages 600-619, July.
    6. Croce, Mariano M. & Nguyen, Thien T. & Schmid, Lukas, 2012. "The market price of fiscal uncertainty," Journal of Monetary Economics, Elsevier, vol. 59(5), pages 401-416.
    7. Jesús Fernández-Villaverde & Pablo Guerrón-Quintana & Keith Kuester & Juan Rubio-Ramírez, 2015. "Fiscal Volatility Shocks and Economic Activity," American Economic Review, American Economic Association, vol. 105(11), pages 3352-3384, November.
    8. Troy Davig & Eric M. Leeper, 2007. "Generalizing the Taylor Principle," American Economic Review, American Economic Association, vol. 97(3), pages 607-635, June.
    9. Azzimonti, Marina & Talbert, Matthew, 2014. "Polarized business cycles," Journal of Monetary Economics, Elsevier, vol. 67(C), pages 47-61.
    10. Marina Azzimonti-Renzo & Matthew Talbert, 2011. "Partisan cycles and the consumption volatility puzzle," Working Papers 11-21, Federal Reserve Bank of Philadelphia.
    11. Canova, Fabio & Marrinan, Jane, 1998. "Sources and propagation of international output cycles: Common shocks or transmission?," Journal of International Economics, Elsevier, vol. 46(1), pages 133-166, October.
    12. Michelangeli Valentina & Santoro Marika, 2013. "Households’ uncertainty about Medicare policy," The B.E. Journal of Macroeconomics, De Gruyter, vol. 13(1), pages 151-186, January.
    13. Dotsey, Michael & Sarte, Pierre Daniel, 2000. "Inflation uncertainty and growth in a cash-in-advance economy," Journal of Monetary Economics, Elsevier, vol. 45(3), pages 631-655, June.
    14. Davig, Troy, 2004. "Regime-switching debt and taxation," Journal of Monetary Economics, Elsevier, vol. 51(4), pages 837-859, May.
    15. Coenen, Günter, 1998. "Intertemporal effects of fiscal policy in an RBC model," Discussion Paper Series 1: Economic Studies 1998,02e, Deutsche Bundesbank.
    16. Michael Dotsey & Ching-Sheng Mao, 1990. "How well do linear approximation methods work? results for suboptimal dynamic equilibria," Working Paper 90-11, Federal Reserve Bank of Richmond.
    17. Michael Dotsey & Ching Sheng Mo, 1994. "The effects of fiscal policy in a neoclassical growth model," Working Paper 94-03, Federal Reserve Bank of Richmond.
    18. Georgios Karras & Davide Furceri, 2009. "Taxes and Growth in Europe," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 7(2), pages 181-204.
    19. Chih-Chin Ho & Yu-Shan Hsu & Ching-Shin Mao, 2011. "Fiscal Discipline in the Recovery from a Global Financial Crisis," Chapters, in: Daigee Shaw & Bih Jane Liu (ed.), The Impact of the Economic Crisis on East Asia, chapter 9, Edward Elgar Publishing.
    20. Jovanović, Mario, 2012. "Empirical evidence on the generalized Taylor principle," Economics Letters, Elsevier, vol. 117(1), pages 78-80.
    21. Thien Nguyen & Lukas Schmid & Howard Kung & Mariano Croce, 2012. "Fiscal Policies and Asset Prices," 2012 Meeting Papers 565, Society for Economic Dynamics.
    22. Danciulescu, Cristina, 2014. "Macroeconomic equilibrium and welfare under simple monetary and switching fiscal policy rules," Economic Modelling, Elsevier, vol. 36(C), pages 58-68.

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