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
Englisch

Erschienen in
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
Wirtschaft
Computable General Equilibrium Models
Incomplete Markets
Taxation and Subsidies: Efficiency; Optimal Taxation
Thema
Incomplete markets
Constrained efficiency
redistribution

Ereignis
Geistige Schöpfung
(wer)
Ünveren, Burak
Ereignis
Veröffentlichung
(wer)
Eastern Macedonia and Thrace Institute of Technology
(wo)
Kavala
(wann)
2017

Handle
Letzte Aktualisierung
10.03.2025, 11:43 MEZ

Datenpartner

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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Artikel

Beteiligte

  • Ünveren, Burak
  • Eastern Macedonia and Thrace Institute of Technology

Entstanden

  • 2017

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