http://swrc.ontoware.org/ontology#TechnicalReport
Constrained Inefficiency and Optimal Taxation with Uninsurable Risks
en
JEL codes: D52, H21
optimal linear taxes
incomplete markets
constrained efficiency
Gottardi Piero
Kajii Atsushi
Nakajima Tomoyuki
When individuals'labor and capital income are subject to uninsurable idiosyncratic risks, should capital and labor be taxed, and if so how? In a two period general equilibrium model with production, we derive a decomposition formula of the welfare effects of these taxes into insurance and distribution effects. This allows us to determine how the sign of the optimal taxes on capital and labor depend on the nature of the shocks, the degree of heterogeneity among consumers'income as well as on the way in which the tax revenue is used to provide lump sum transfers to consumers. When shocks affect primarily labor income and heterogeneity is small, the optimal tax on capital is positive. However in other cases a negative tax on capital is welfare improving.
2012～2016年度科学研究費補助金[基盤研究(S)]「長期デフレの解明」(研究代表者 東京大学経済学研究科・渡辺努, 課題番号：24223003)
JSPS Grants-in-Aid for Scientific Research (S) Understanding Persistent Deflation in Japan Working Paper Series
038
2014-03
UTokyo Price Project
http://www.price.e.u-tokyo.ac.jp/researchdata/