Political economy of Ramsey taxation

Daron Acemoglu, Mikhail Golosov, Aleh Tsyvinski

Research output: Contribution to journalArticle

24 Scopus citations

Abstract

We study the dynamic taxation of capital and labor in the Ramsey model under the assumption that taxes and public good provision are decided by a self-interested politician who cannot commit to policies. We show that, as long as the politician is as patient as the citizens, the Chamley-Judd result of zero long-run taxes holds. In contrast, if the politician is less patient than the citizens, the best (subgame perfect) equilibrium from the viewpoint of the citizens involves long-run capital taxation.

Original languageEnglish (US)
Pages (from-to)467-475
Number of pages9
JournalJournal of Public Economics
Volume95
Issue number7-8
DOIs
StatePublished - Aug 2011

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

Keywords

  • Capital taxation
  • Fiscal policy
  • Political economy

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    Acemoglu, D., Golosov, M., & Tsyvinski, A. (2011). Political economy of Ramsey taxation. Journal of Public Economics, 95(7-8), 467-475. https://doi.org/10.1016/j.jpubeco.2010.10.014