Guo, Jang-Ting - In: Annals of Economics and Finance 6 (2005) 1, pp. 25-36
This paper examines the optimal (first-best) fiscal policy in a stochastic, infinite-horizon representative agent model that exhibits a ¡°keeping up with the Joneses¡± utility function and imperfectly competitive product markets. We find that the optimal labor tax is a constant, whose sign...