Artikel
On risk induced by technical change
Purpose: The purpose of this paper is to analyze the efficiency loss due to incomplete financial markets when risk is induced by technological uncertainty. Design/methodology/approach: A worker-capitalist general equilibrium model is developed. It is assumed that future technical change is a stochastic event, causing uncertainty in future relative prices. Then the model is calibrated to the US data. Findings: Our first finding is theoretical: the competitive equilibrium is Pareto-inefficient. Then we numerically calculate the taxes that make all individuals better-off at the calibrated parameter values. The results clearly show how the burden of taxation should be shared among workers and capitalists when the government uses redistribution of income as a tool of mitigating the loss of efficiency due to technological shocks. Research limitations/implications: The model is obviously a stripped-down version of reality, and hence, the results should be taken with a grain of salt as the numerical computations would be definitely sensitive to certain rich details of real life that are neglected in this study. Originality/value: The results show that the total amount of employment, and production are not affected by optimal taxation, which is a surprising result. Indeed, the inefficiency is primarily caused by the distribution of labor supply among individuals. The optimal taxes are also numerically computed.
- Sprache
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Englisch
- Erschienen in
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Journal: International Journal of Business and Economic Sciences Applied Research (IJBESAR) ; ISSN: 2408-0101 ; Volume: 10 ; Year: 2017 ; Issue: 1 ; Pages: 42-48 ; Kavala: Eastern Macedonia and Thrace Institute of Technology
- Klassifikation
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Wirtschaft
Computable General Equilibrium Models
Incomplete Markets
Taxation and Subsidies: Efficiency; Optimal Taxation
- Thema
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Incomplete markets
Constrained efficiency
redistribution
- Ereignis
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Geistige Schöpfung
- (wer)
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Ünveren, Burak
- Ereignis
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Veröffentlichung
- (wer)
-
Eastern Macedonia and Thrace Institute of Technology
- (wo)
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Kavala
- (wann)
-
2017
- Handle
- Letzte Aktualisierung
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10.03.2025, 11:43 MEZ
Datenpartner
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Objekttyp
- Artikel
Beteiligte
- Ünveren, Burak
- Eastern Macedonia and Thrace Institute of Technology
Entstanden
- 2017
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