NotesECN741-page2 - Non-Steady State 20 2.2.3 Werning(QJE...

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ECN 741: Public Economics Fall 2008 Contents 1 Ramsey Taxation - Primal Approach 3 1.1 Ramsey problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1.2 Elasticities and optimal taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.2.1 Additive separable utility functions . . . . . . . . . . . . . . . . . . . 7 1.2.2 Quasi-linear utility function . . . . . . . . . . . . . . . . . . . . . . . 7 1.2.3 Complementarity with leisure . . . . . . . . . . . . . . . . . . . . . . 8 1.3 Uniform commodity taxation . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1.4 Intermediate good taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2 Optimal Fiscal Policy-Dynamic Ramsey Taxation 12 2.1 Ramsey problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 2.2 Chamley-Judd result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 2.2.1 Heterogeneous consumers . . . . . . . . . . . . . . . . . . . . . . . . 16 2.2.2
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Unformatted text preview: Non-Steady State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 2.2.3 Werning (QJE, 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 2.3 Taxing Capital in Life Cycle Economies (Erosa and Gervais (2002)) . . . . . 26 3 Mirrleesian Approach to Optimal Taxation 30 3.1 The New Dynamic Public Finance . . . . . . . . . . . . . . . . . . . . . . . . 39 3.1.1 Inverse Euler Equation . . . . . . . . . . . . . . . . . . . . . . . . . . 40 3.1.2 Long-run properties of efficient allocations . . . . . . . . . . . . . . . 44 3.1.3 Aggregate Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 3.1.4 Inter-temporal optimality with balanced growth preferences . . . . . 58 3.2 Implementing Efficient Allocations . . . . . . . . . . . . . . . . . . . . . . . 59 3.2.1 Wedges and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 References 64 2...
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