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Tax structure, welfare, and the stability of equilibrium in a model of dynamic optimal fiscal policy

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  • Jang-Ting Guo
  • Kevin J. Lansing

Abstract

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.

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  • Jang-Ting Guo & Kevin J. Lansing, 1994. "Tax structure, welfare, and the stability of equilibrium in a model of dynamic optimal fiscal policy," Working Papers (Old Series) 9410, Federal Reserve Bank of Cleveland.
    • Handle: RePEc:fip:fedcwp:9410
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    References listed on IDEAS

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    1. Jang-Ting Guo & Kevin J. Lansing, 1994. "The welfare effects of tax simplification: a general-equilibrium analysis," Working Papers (Old Series) 9409, Federal Reserve Bank of Cleveland.

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    Keywords

    Taxation; Fiscal policy;

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