Arbeitspapier
A one-off wealth levy? Assessing the pros, the cons and the importance of credibility
From an economic perspective, imposing a credible one-off net wealth levy in crisis times as a tool to ward off a national emergency appears to be advantageous as, in an ideal world, this would not distort market players' allocation decisions. However, in practice, charging such a levy may give rise to distortions and unwanted effects on the real economy. Credibility that the levy will be imposed as a once-only measure is key to ensuring that harmful distortions in the allocation of resources are kept to a minimum. This paper confirms this using an analysis based on a DSGE model. In practice, while a government cannot guarantee that such a measure will be taken once only, it can contribute to the credibility thereof in a number of ways. First, the country's future 'business model' must become apparent; second, there has to be a basic level of confidence in the government and a firm belief that the budgetary imbalances were not actively caused by the state - at least not by the government currently in power; third, a verifiable outlook of sustainable public finances must be in place; and fourth, the political costs of a repeat levy must be high. This paper also discusses the potential impact of alternative model setups as well as some practical implementation problems.
- ISBN
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978-3-95729-075-5
- Sprache
-
Englisch
- Erschienen in
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Series: Bundesbank Discussion Paper ; No. 29/2014
- Klassifikation
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Wirtschaft
- Thema
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Wealth Levy
Credibility
Public Finances
DSGE Models
- Ereignis
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Geistige Schöpfung
- (wer)
-
Kempkes, Gerhard
Stähler, Nikolai
- Ereignis
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Veröffentlichung
- (wer)
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Deutsche Bundesbank
- (wo)
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Frankfurt a. M.
- (wann)
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2014
- Handle
- Letzte Aktualisierung
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10.03.2025, 11:45 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Kempkes, Gerhard
- Stähler, Nikolai
- Deutsche Bundesbank
Entstanden
- 2014