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Different policy effects of Ramsey and overlapping generations models

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  • Watanabe, Minoru
  • Yasuoka, Masaya

Abstract

Effects of taxation are examined in many studies. For such studies, the model economy assumes a logarithmic utility function. Results derived from our study indicate that attention should be devoted to using logarithm utility functions. We check the redistribution policy effect financed by capital income taxation in models of two types: a Ramsey model and an overlapping generations model. If the labor supply is inelastic, then effects of the redistribution policy financed by taxation of capital income differs between the Ramsey model and the overlapping generations model. However, if the labor supply is elastic, then the policy financed by capital income taxation is the same between the Ramsey model and the overlapping generations model. Moreover, this study presents simulation results.

Suggested Citation

  • Watanabe, Minoru & Yasuoka, Masaya, 2021. "Different policy effects of Ramsey and overlapping generations models," MPRA Paper 109635, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:109635
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    References listed on IDEAS

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    1. Minoru Watanabe & Yusuke Miyake & Masaya Yasuoka, 2015. "Public Investment Financed By Consumption Tax In An Aging Society," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 60(05), pages 1-17, December.
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    6. Fanti, Luciano & Gori, Luca, 2010. "Child policy solutions for the unemployment problem," Economics Letters, Elsevier, vol. 109(3), pages 147-149, December.
    7. Chamley, Christophe, 1986. "Optimal Taxation of Capital Income in General Equilibrium with Infinite Lives," Econometrica, Econometric Society, vol. 54(3), pages 607-622, May.
    8. Shuanglin Lin, 2001. "Taxation, Human Capital Accumulation and Economic Growth," The Japanese Economic Review, Japanese Economic Association, vol. 52(2), pages 185-197, June.
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    More about this item

    Keywords

    Overlapping generations model; Ramsey model; Redistribution; Taxation;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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