Nonoptimality of the Friedman Rule with Capital Income Taxation
Petrucci, Alberto (2008) Nonoptimality of the Friedman Rule with Capital Income Taxation. [Working Paper]. p. 34.
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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-Grohè and Uribe (2004a)— follow from the violation of the Diamond and Mirrlees (1971) principle on production efficiency.
|Item Type:||Report / Paper (Working Paper)|
|Research documents and activity classification:||Working Papers > Non-Refereed Working Papers / of national relevance only|
|Divisions:||Department of Business and Management|
|Uncontrolled Keywords:||Optimal inflation tax. Factor taxation. Transaction costs technology. Second-best analysis. Capital accumulation.|
|MIUR Scientific Area:||Area 13 - Economics and Statistics > SECS-P/01 Political Economy|
|Deposited by:||Chiara Annulli (admin)|
|Date Deposited:||27 Oct 2009 14:44|
|Last Modified:||21 Apr 2015 23:10|
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