Optimal fiscal policy under finite planning horizons
International Tax and Public Finance(2024)
摘要
We propose a novel framework that revisits the seminal Chamley-Judd zero capital taxation result in light of bounded rationality stemming from a finite policy planning horizon and structural frictions in fiscal institutions. We show a mechanism that generates positive optimal capital taxation in the long run. Our numerical results indicate that the current tax system in the United States could be near-optimal in a constrained environment where policymakers exhibit limited policy planning horizons and imperfect altruism toward household welfare under subsequent governments.
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关键词
Fiscal policy,Optimal taxation,Institution,Bounded rationality,E02,E62,E71,H21
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