IDEAS home Printed from https://ideas.repec.org/p/hal/journl/halshs-04033250.html
   My bibliography  Save this paper

Intertemporal equilibrium with physical capital and financial asset: role of dividend taxation

Author

Listed:
  • Ngoc-Sang Pham

    (Métis Lab EM Normandie - EM Normandie - École de Management de Normandie)

Abstract

The paper introduces dividend taxation and productive government spending in an infinite-horizon general equilibrium model with heterogeneous agents and financial market imperfections. We point out that imposing a dividend tax and using the revenue from this tax to finance productive government spending may prevent economic recession and promote economic growth. We also investigate the issue of optimal dividend taxation and the role of dividend taxation on the asset price bubble.

Suggested Citation

  • Ngoc-Sang Pham, 2023. "Intertemporal equilibrium with physical capital and financial asset: role of dividend taxation," Post-Print halshs-04033250, HAL.
    • Handle: RePEc:hal:journl:halshs-04033250
    DOI: 10.1016/j.mathsocsci.2023.03.002
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-04033250
    as

    Download full text from publisher

    File URL: https://shs.hal.science/halshs-04033250/document
    Download Restriction: no
    File URL: https://libkey.io/10.1016/j.mathsocsci.2023.03.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. François Gourio & Jianjun Miao, 2010. "Firm Heterogeneity and the Long-Run Effects of Dividend Tax Reform," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(1), pages 131-168, January.
    2. Kocherlakota, Narayana, 2008. "Injecting rational bubbles," Journal of Economic Theory, Elsevier, vol. 142(1), pages 218-232, September.
    3. Davide Furceri & Ms. Grace B Li, 2017. "The Macroeconomic (and Distributional) Effects of Public Investment in Developing Economies," IMF Working Papers 2017/217, International Monetary Fund.
    4. Cuong Le Van & Ngoc-Sang Pham, 2016. "Intertemporal equilibrium with financial asset and physical capital," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 62(1), pages 155-199, June.
    5. Matteo F. Ghilardi & Roy Zilberman, 2024. "Macroeconomic Effects of Dividend Taxation with Investment Credit Limits," Journal of Political Economy Macroeconomics, University of Chicago Press, vol. 2(3), pages 409-448.
    6. John Geanakoplos & William Zame, 2014. "Collateral equilibrium, I: a basic framework," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 56(3), pages 443-492, August.
    7. repec:dau:papers:123456789/13605 is not listed on IDEAS
    8. Manuel S. Santos & Michael Woodford, 1997. "Rational Asset Pricing Bubbles," Econometrica, Econometric Society, vol. 65(1), pages 19-58, January.
    9. Kamihigashi, Takashi & Roy, Santanu, 2007. "A nonsmooth, nonconvex model of optimal growth," Journal of Economic Theory, Elsevier, vol. 132(1), pages 435-460, January.
    10. Alstadsæter, Annette & Jacob, Martin & Michaely, Roni, 2017. "Do dividend taxes affect corporate investment?," Journal of Public Economics, Elsevier, vol. 151(C), pages 74-83.
    11. repec:hal:pseose:hal-01302382 is not listed on IDEAS
    12. Olivier Bruno & Cuong Van & Benoît Masquin, 2009. "When does a developing country use new technologies?," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 40(2), pages 275-300, August.
    13. Kocherlakota, Narayana R., 1992. "Bubbles and constraints on debt accumulation," Journal of Economic Theory, Elsevier, vol. 57(1), pages 245-256.
    14. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 222-279, April.
    15. Jones, Charles I., 2005. "Growth and Ideas," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 16, pages 1063-1111, Elsevier.
    16. Francois Gourio & Jianjun Miao, 2011. "Transitional Dynamics of Dividend and Capital Gains Tax Cuts," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(2), pages 368-383, April.
    17. Daron Acemoglu & Martin Kaae Jensen, 2015. "Robust Comparative Statics in Large Dynamic Economies," Journal of Political Economy, University of Chicago Press, vol. 123(3), pages 587-640.
    18. Alberto Martin & Jaume Ventura, 2018. "The Macroeconomics of Rational Bubbles: A User's Guide," Annual Review of Economics, Annual Reviews, vol. 10(1), pages 505-539, August.
    19. Atkinson, A B & Sandmo, A, 1980. "Welfare Implications of the Taxation of Savings," Economic Journal, Royal Economic Society, vol. 90(359), pages 529-549, September.
    20. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    21. Takashi Kamihigashi, 2008. "The spirit of capitalism, stock market bubbles and output fluctuations," International Journal of Economic Theory, The International Society for Economic Theory, vol. 4(1), pages 3-28, March.
    22. Brunnermeier, Markus K. & Oehmke, Martin, 2013. "Bubbles, Financial Crises, and Systemic Risk," Handbook of the Economics of Finance, in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, volume 2, chapter 0, pages 1221-1288, Elsevier.
    23. Judd, Kenneth L., 1985. "Redistributive taxation in a simple perfect foresight model," Journal of Public Economics, Elsevier, vol. 28(1), pages 59-83, October.
    24. repec:hal:pseptp:hal-03594185 is not listed on IDEAS
    25. Dackehag, Margareta & Hansson, Åsa, 2015. "Taxation of Dividend Income and Economic Growth: The Case of Europe," Working Paper Series 1081, Research Institute of Industrial Economics.
    26. Cuong Le Van & Rose-Anne Dana, 2003. "Dynamic Programming in Economics," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00119098, HAL.
    27. Narayana R. Kocherlakota, 2010. "The New Dynamic Public Finance," Economics Books, Princeton University Press, edition 1, number 9222.
    28. repec:dau:papers:123456789/416 is not listed on IDEAS
    29. Francois Gourio & Jianjun Miao, 2011. "Transitional Dynamics of Dividend and Capital Gains Tax Cuts," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(2), pages 368-383, April.
    30. repec:hal:journl:hal-03594185 is not listed on IDEAS
    31. Manjira Datta & Kevin Reffett & Łukasz Woźny, 2018. "Comparing recursive equilibrium in economies with dynamic complementarities and indeterminacy," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 66(3), pages 593-626, October.
    32. Luigi Montrucchio, 2004. "Cass transversality condition and sequential asset bubbles," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 24(3), pages 645-663, October.
    33. Bosi, Stefano & Le Van, Cuong & Pham, Ngoc-Sang, 2022. "Real indeterminacy and dynamics of asset price bubbles in general equilibrium," Journal of Mathematical Economics, Elsevier, vol. 100(C).
    34. Tirole, Jean, 1982. "On the Possibility of Speculation under Rational Expectations," Econometrica, Econometric Society, vol. 50(5), pages 1163-1181, September.
    35. Lucas, Robert E, Jr, 1978. "Asset Prices in an Exchange Economy," Econometrica, Econometric Society, vol. 46(6), pages 1429-1445, November.
    36. repec:hal:cesptp:hal-03594185 is not listed on IDEAS
    37. Tirole, Jean, 1985. "Asset Bubbles and Overlapping Generations," Econometrica, Econometric Society, vol. 53(6), pages 1499-1528, November.
    38. Chamley, Christophe, 1986. "Optimal Taxation of Capital Income in General Equilibrium with Infinite Lives," Econometrica, Econometric Society, vol. 54(3), pages 607-622, May.
    39. Ludwig Straub & Iván Werning, 2020. "Positive Long-Run Capital Taxation: Chamley-Judd Revisited," American Economic Review, American Economic Association, vol. 110(1), pages 86-119, January.
    40. Cuong Le Van & Rose-Anne Dana, 2003. "Dynamic Programming in Economics," Post-Print halshs-00119098, HAL.
    41. Jones, Larry E & Manuelli, Rodolfo E, 1990. "A Convex Model of Equilibrium Growth: Theory and Policy Implications," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1008-1038, October.
    42. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pham, Ngoc-Sang, 2017. "Dividend taxation in an infinite-horizon general equilibrium model," MPRA Paper 80580, University Library of Munich, Germany.
    2. Bosi, Stefano & Le Van, Cuong & Pham, Ngoc-Sang, 2022. "Real indeterminacy and dynamics of asset price bubbles in general equilibrium," Journal of Mathematical Economics, Elsevier, vol. 100(C).
    3. repec:hal:wpaper:halshs-02993656 is not listed on IDEAS
    4. Bosi, Stefano & Van, Cuong Le & Pham, Ngoc-Sang, 2018. "Intertemporal equilibrium with heterogeneous agents, endogenous dividends and collateral constraints," Journal of Mathematical Economics, Elsevier, vol. 76(C), pages 1-20.
    5. Bosi, Stefano & Le Van, Cuong & Pham, Ngoc-Sang, 2017. "Asset bubbles and efficiency in a generalized two-sector model," Mathematical Social Sciences, Elsevier, vol. 88(C), pages 37-48.
    6. Pham, Ngoc-Sang, 2024. "The relationship between general equilibrium models with infinite-lived agents and overlapping generations models, and some applications," MPRA Paper 122659, University Library of Munich, Germany.
    7. Stefano Bosi & Thai Ha‐Huy & Cao‐Tung Pham & Ngoc‐Sang Pham, 2022. "Ascendant altruism and asset price bubbles," International Journal of Economic Theory, The International Society for Economic Theory, vol. 18(4), pages 532-551, December.
    8. Stefano Bosi & Cuong Le Van & Ngoc-Sang Pham, 2015. "Intertemporal equilibrium with heterogeneous agents, endogenous dividends, and borrowing constraints," Documents de recherche 15-05, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
    9. Cuong Le Van & Ngoc-Sang Pham, 2021. "Why Does Productivity Matter?," Working Papers halshs-03139392, HAL.
    10. Bosi, Stefano & Ha-Huy, Thai & Le Van, Cuong & Pham, Cao-Tung & Pham, Ngoc-Sang, 2018. "Financial bubbles and capital accumulation in altruistic economies," Journal of Mathematical Economics, Elsevier, vol. 75(C), pages 125-139.
    11. Ngoc-Sang Pham, 2023. "Some Lectures on Macroeconomics," Working Papers hal-04366349, HAL.
    12. Stefano Bosi & Cuong Le Van & Ngoc-Sang Pham, 2017. "Rational Land and Housing Bubbles in Infinite-Horizon Economies," Studies in Economic Theory, in: Kazuo Nishimura & Alain Venditti & Nicholas C. Yannelis (ed.), Sunspots and Non-Linear Dynamics, chapter 0, pages 203-230, Springer.
    13. Tomohiro Hirano & Ryo Jinnai & Alexis Akira Toda, 2022. "Leverage, Endogenous Unbalanced Growth, and Asset Price Bubbles," Papers 2211.13100, arXiv.org, revised Feb 2024.
    14. Pham, Ngoc-Sang, 2017. "Assets with possibly negative dividends," MPRA Paper 78193, University Library of Munich, Germany.
    15. Pham, Ngoc-Sang & Pham, Thi Kim Cuong, 2020. "Effects of foreign aid on the recipient country’s economic growth," Journal of Mathematical Economics, Elsevier, vol. 86(C), pages 52-68.
    16. Ha-Huy, Thai & Tran, Nhat Thien, 2020. "A simple characterisation for sustained growth," Journal of Mathematical Economics, Elsevier, vol. 91(C), pages 141-147.
    17. Hirano, Tomohiro & Toda, Alexis Akira, 2024. "Bubble economics," Journal of Mathematical Economics, Elsevier, vol. 111(C).
    18. Capolupo, Rosa, 2009. "The New Growth Theories and Their Empirics after Twenty Years," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-72.
    19. Bidian, Florin, 2015. "Portfolio constraints, differences in beliefs and bubbles," Journal of Mathematical Economics, Elsevier, vol. 61(C), pages 317-326.
    20. Stefano Bosi & Cuong Le Van & Ngoc-Sang Pham, 2014. "Intertemporal equilibrium with production: bubbles and efficiency," Post-Print halshs-01020888, HAL.
    21. Simon Bösenberg & Peter Egger & Benedikt Zoller-Rydzek, 2018. "Capital taxation, investment, growth, and welfare," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(2), pages 325-376, April.

    More about this item

    Keywords

    Intertemporal equilibrium; Recession; Economic growth; Productive government spending; Dividend taxation; Asset price bubbles;
    All these keywords.

    JEL classification:

    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:halshs-04033250. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.