Last edited by Nalmaran
Wednesday, August 5, 2020 | History

2 edition of Optimal intertemporal taxation on consumption and the term structure of government debt found in the catalog.

Optimal intertemporal taxation on consumption and the term structure of government debt

International Monetary Fund.

Optimal intertemporal taxation on consumption and the term structure of government debt

by International Monetary Fund.

  • 364 Want to read
  • 9 Currently reading

Published by International Monetary Fund in Washington, D.C .
Written in English


Edition Notes

Statementprepared by Howell H. Zee.
SeriesIMF working paper -- WP/88/115
ContributionsZee, Howell H.
The Physical Object
Pagination18 p. --
Number of Pages18
ID Numbers
Open LibraryOL18807569M

By definition, the demand for current goods is the sum of consumption demand, investment demand, and government purchases: Y^d=C^d(r)+ I^d(r)+G Earlier in this chapter we argued that consumption demand depends upon current income . Terms in this set () Consumption smoothing refers to. the tendency of consumers to seek a consumption path over time that is smoother than income. Intertemporal decisions involve economic decisions. involving trade-offs across periods of time. The simplest device to analyze dynamic decisions is a. two-period model.

Rates of saving in America have never been especially high, but they seem to have dipped even lower in recent years, as the data from the Bureau of Economic Analysis in Figure 1 show. A decision about how much to save can be represented using an intertemporal budget old decisions about the quantity of financial savings show the same . We study the response of household debt and intertemporal consumption allocation to interest rates, and develop a new approach to estimating the Elasticity of Intertemporal Substitution (EIS). Our specific focus is on the demand for mortgage debt, which accounts for the bulk of household debt in most Size: KB.

debt management. While this approach is not new, as it is rooted in the optimal taxation theory, fiscal insurance is a better term to encompass the potential goals of debt management. Indeed, as called for by optimal taxation, a debt structure that provides a hedge against shocks to the budget allows policy makers to minimize variations in tax Cited by: Abstract. The government budget constraint is an accounting identity linking the monetary authority’s choices of money growth or nominal interest rate and the fiscal authority’s choices of spending, taxation, and borrowing at a point in by: 2.


Share this book
You might also like
Evidence (Key Facts)

Evidence (Key Facts)

Rise to follow

Rise to follow

Gandhis challenge to Christianity.

Gandhis challenge to Christianity.

Chile and the United States, 1880-1962

Chile and the United States, 1880-1962

Old English sound changes for beginners

Old English sound changes for beginners

EDA

EDA

amazing Samson

amazing Samson

organs, organists & choir of Leeds Parish Church

organs, organists & choir of Leeds Parish Church

School-based opportunities for tobacco use intervention

School-based opportunities for tobacco use intervention

Modern developments in hydrometry

Modern developments in hydrometry

Optimal intertemporal taxation on consumption and the term structure of government debt by International Monetary Fund. Download PDF EPUB FB2

Get this from a library. Optimal Intertemporal Taxationon Consumption and the Term Structure of Government Debt. [International Monetary Fund.] -- This paper addresses the time-consistency problem of optimal policy when intertemporal prices are inflexible.

For small, open economies facing given world interest rates, it shows that a consumption. relates to the size of debt, the second to its term structure. The present paper develops a basic neutrality result concerning the term structure of debt under optimal intertemporal taxation on consumption in an economy with fixed intertemporal prices.

As it will become clear, this result has important policy implications for small, open economiesAuthor: Howell H. Zee. This paper tests how subjects behave in an intertemporal consumption/saving experiment when borrowing is allowed and whether subjects treat debt differentl Two treatments create environments where either saving or borrowing is required for optimal by:   We consider the intertemporal structure of optimal taxation when there is only a single consumption good and utility is additively separable between consumption and leisure.

In this case, if the optimal allocation requires future consumption to be random given current information, then individuals face distorted consumption by: Optimal Sin Taxes When t = 0: x∗(0) ≥ x∗∗(0) as β ≤ 1 Identical households Optimal tax: θ∗∗ = (1−β)c x(x∗∗) =⇒ Pigouvian tax on externality imposed on one’s self Heterogeneous households 1.

If β = 1 for all households, θ∗ = 0 2. If β 0, but first best not achieved due to heterogeneity in γ,ρ,β 3.

Consumption taxes are set to satisfy the intertemporal wedge condition, and they are constant starting in period one. Given these consumption taxes, labor income taxes are set to satisfy. Inspecting and, we clearly see that the consumption tax rate in period one, τ 1 c, must be greater than the tax rate in period 0, τ 0 by: 1.

In a two-period world with endogenous savings and two assets, the optimal tax structure and optimal diversification of aggregate (capital) risk between private and public consumption Author: Kersten Kellermann. 3 2. The Intertemporal Government Budget Constraint In order to examine the relationship which exists between the government's fiscal stance and the performance of the macroeconomy, the appropriate framework is the government's intertemporal budget constraint.

Intertemporal Fiscal Policy An issue that periodically receives much media attention is whether government spending and taxation decisions affect market interest rates.

This issue was prominently in the news in the early ’s when the Bush administration was considering lowering taxes and raising government spending.

Intertemporal Choices We want to explain how consumers allocate their consumption over time. This will explain why consumers:» borrow (consume more today than their endowment today)» save/lend (consume less today than their endowment today) 14 Intertemporal Choices, cont’d Simplest setting: two time periods 1, 2.

Consumption in period. Equation () says that consumption at any time period is distributed evenly across their life-time. In other words, agent’s "smooth" their consumption pro le over each stage of their life.

Proposition The optimal planned consumption pro le appropriates equal subdivisions of expected aggregate income to consumption in each Size: KB. The reason is a simple one: The debt of the U.S. federal government rose from 26 percent of GDP in to 50 percent of GDP in Many European countries exhibited a similar pattern during this period.

In the past, such large increases in government debt occurred only during wars or Size: KB. The basic structure of this book is simple to understand. It covers optimization methods and applications in discrete time and in continuous time, both in worlds with certainty and worlds with uncertainty.

discrete time continuous time deterministic setup Part I Part II stochastic setup Part III Part IV Table Basic structure of this book. I. Introduction. How should government debt maturity be structured. Two seminal papers by Angeletos () and Buera and Nicolini () argue that the maturity of government debt can be optimally structured so as to completely hedge the economy against fiscal shocks.

This research concludes that optimal debt maturity is tilted long, with the government purchasing short-term Cited by: The interesting aspect of this version of the government's intertemporal budget constraint is that it demonstrates how higher growth of nominal output (i.e.

either higher real output growth and/or higher inflation) reduces the burden of debt repayments. As long as the long term average growth in nominal output exceeds the long term average.

Specifically we study optimal fiscal policy under incomplete markets where the government issues bonds of maturity N > 1. Assuming the existence of long bonds introduces an additional intertemporal mechanism that makes taxes more volatile in order to achieve lower debt management costs.

In other words, fiscal policy is secondary to debt management. taxes, government transfers (including interest payments) and government debt-creation are accounted for by relating consumption to disposable income and by including the stock of monetary and interest-bearing debt in the private sector's stock of wealth.

However, the effects on current consumption of future taxes and transfers, as well as the File Size: KB. I find significant elasticity of intertemporal substitution in consumption of the representative agent ranging from to and risk aversion from to Author: Julian Thimme.

Optimal Intertemporal Choice We have found the intertemporal budget constraint. To find the optimal choice we now need to consider the preferences of the individual over bundles of intertemporal consumption (c1, c2).

In chapter 21 we will consider a particular type of preferences which seems to have good empirical validity. the government’s intertemporal revenue needs. The Optimal Taxation of Household Capital Income There is a large literature on the optimality of taxing capital income—or of not taxing it.

Results depend on the type of model being used, and the assumptions underlying the instruments and information that is available to the government. In the process of doing so they avoid increasing taxes and alternatively increase long-term debt.

The increase of long-term debt has the property of acting as a hedge for distortionary taxation and innovations in aggregate consumption growth. Another benefit is that it allows governments to trade current inflation for future inflation and spread the effects stemming .Taxation, Government Spending and Economic Growth 1 Oct PM.

2 Oct PM. TAXATION, GOVERNMENT SPENDING AND ECONOMIC GROWTH EDITED BY PHILIP BOOTH with contributions from RYAN BOURNE RORY MEAKIN Tax on consumption Taxes on wealth Corporate tax File Size: 2MB. Intertemporal Choice: An economic term describing how an individual's current decisions affect what options become available in the future.

Theoretically, by not consuming today, consumption Author: Daniel Liberto.