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dc.contributor.authorBakis, Ozan
dc.contributor.authorKAYMAK, Baris
dc.date.accessioned2013-01-09T19:29:13Z
dc.date.available2013-01-09T19:29:13Z
dc.date.issued2012-08
dc.identifier.urihttp://hdl.handle.net/1866/8855
dc.publisherUniversité de Montréal. Département de sciences économiques.fr
dc.subjectIntergenerational mobilityen
dc.subjectOptimal taxationen
dc.subjectProgressive redistributionen
dc.subjectIncomplete marketsen
dc.titleOn the optimality of progressive income redistributionen
dc.typeArticleen
dcterms.abstractWe compute the optimal non-linear tax policy for a dynastic economy with uninsurable risk, where generations are linked by dynastic wealth accumulation and correlated incomes. Unlike earlier studies, we find that the optimal long-run tax policy is moderately regressive. Regressive taxes lead to higher output and consumption, at the expense of larger after-tax income inequality. Nevertheless, equilibrium effects and the availability of self-insurance via bequests mitigate the impact of regressive taxes on consumption inequality, resulting in improved average welfare overall. We also consider the optimal once-and-for-all change in the tax system, taking into account the transition dynamics. Starting at the U.S. status quo, the optimal tax reform is slightly more progressive than the current system.en
dcterms.bibliographicCitationCahier de recherche ; #2012-09
dcterms.isPartOfurn:ISSN:0709-9231
dcterms.languageengen
UdeM.VersionRioxxVersion publiée / Version of Record


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