Artikel

Progressive taxation and (in)stability in an exogenous growth model with non-market ("home") production

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We show that in a exogenous growth model with non-market ("home") sector calibrated to Bulgarian data under the progressive taxation regime (1993-2007), the economy exhibits equilibrium indeterminacy due to the presence of non-market production. These results are in line with the findings in Benhabib and Farmer (1994, 1996) and Farmer (1999). Also, the findings in this paper are in contrast to Guo and Lansing (1988) who argue that progressive taxation works as an automatic stabilizer. Under the flat tax regime (2008-16), the economy calibrated to Bulgarian data displays saddle-path stability. The decrease in the average effective tax rate addresses the indeterminacy issue and eliminates the "stable focus" dynamics.

Language: Englisch

Bibliographic citation: Journal: Journal of Economics and Econometrics ; ISSN: 2032-9660 ; Year: 2019 ; Issue: Forthcoming ; Brussels: The Economics and Econometrics Research Institute

Classification: Wirtschaft
Informal Labor Markets
Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡
One, Two, and Multisector Growth Models

Subject: Progressive taxation
Non-market sector
Home production
Equilibrium (In)determinacy

Event: Geistige Schöpfung

(who): Vasilev, Aleksandar

Event: Veröffentlichung

(who): The Economics and Econometrics Research Institute
ZBW – Leibniz Information Centre for Economics

(where): Brussels

(when): 2019

Handle: http://hdl.handle.net/10419/191596

Last update: 10.03.2025, 11:42 AM CET

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Object type

Artikel

Associated

Vasilev, Aleksandar
The Economics and Econometrics Research Institute
ZBW – Leibniz Information Centre for Economics

Time of origin

2019

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