Optimal taxation and debt with uninsurable risks to human capital accumulation

We consider an economy where individuals face uninsurable risks to their human capital accumulation and study the problem of determining the optimal level of linear taxes on capital and labor income together with the optimal path of the debt level. We show both analytically and numerically that in the presence of such risks it is beneficial to tax both labor and capital income and to have positive government debt.

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Year of publication:	2014
Authors:	Gottardi, Piero ; Kajii, Atsushi ; Nakajima, Tomoyuki
Publisher:	Atlanta, GA : Federal Reserve Bank of Atlanta
Subject:	incomplete markets \| Ramsey equilibrium \| optimal taxation \| optimal public debt

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Series:	Working Paper ; 2014-24
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	806859695 [GVK] hdl:10419/114482 [Handle] RePEc:fip:fedawp:2014-24 [RePEc]
Classification:	D52 - Incomplete Markets ; D60 - Welfare Economics. General ; D90 - Intertemporal Choice and Growth. General ; E20 - Consumption, Saving, Production, Employment, and Investment. General ; E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation ; H21 - Efficiency; Optimal Taxation ; O40 - Economic Growth and Aggregate Productivity. General
Source:	EconStor

Persistent link: https://www.econbiz.de/10011310194