Artikel
Progressive taxation and (in)stability in an exogenous growth model with Epstein-Zin recursive preferences
We show that in a exogenous growth model with Epstein-Zin (1989, 1991) recursive preferences calibrated to Bulgarian data under the progressive taxation regime (1993-2007), the economy exhibits equilibrium indeterminacy. These results are in line with the findings in Benhabib and Farmer (1994, 1996) and Farmer (1999). Also, the fi ndings in this paper are in contrast to Guo and Lansing (1988) who argue that progressive taxation works as an automatic stabilizer. In contrast, under the flat tax regime (2008-16), the same economy calibrated to Bulgarian data now displays saddle-path stability. The decrease in the average effective tax rate addresses the indeterminacy issue and eliminates the "sink" dynamics.
- Sprache
-
Englisch
- Erschienen in
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Journal: Journal of Economics and Econometrics ; ISSN: 2032-9660 ; Year: 2020 ; Issue: forthcoming ; Brussels: Economics and Econometrics Research Institute
- Klassifikation
-
Wirtschaft
Taxation and Subsidies: Incidence
Informal Labor Markets
- Thema
-
progressive taxation
equilibrium (in)determinacy
Epstein-Zin preferences
Bulgaria
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Vasilev, Aleksandar
- Ereignis
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Veröffentlichung
- (wer)
-
Economics and Econometrics Research Institute
ZBW – Leibniz Information Centre for Economics
- (wo)
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Brussels
- (wann)
-
2020
- Handle
- Letzte Aktualisierung
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10.03.2025, 11:44 MEZ
Datenpartner
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Objekttyp
- Artikel
Beteiligte
- Vasilev, Aleksandar
- Economics and Econometrics Research Institute
- ZBW – Leibniz Information Centre for Economics
Entstanden
- 2020
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