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
978-3-95729-075-5
Sprache
Englisch

Erschienen in
Series: Bundesbank Discussion Paper ; No. 29/2014

Klassifikation
Wirtschaft
Thema
Wealth Levy
Credibility
Public Finances
DSGE Models

Ereignis
Geistige Schöpfung
(wer)
Kempkes, Gerhard
Stähler, Nikolai
Ereignis
Veröffentlichung
(wer)
Deutsche Bundesbank
(wo)
Frankfurt a. M.
(wann)
2014

Handle
Letzte Aktualisierung
10.03.2025, 11:45 MEZ

Datenpartner

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

Objekttyp

  • Arbeitspapier

Beteiligte

  • Kempkes, Gerhard
  • Stähler, Nikolai
  • Deutsche Bundesbank

Entstanden

  • 2014

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