Optimal Ramsey Capital Income Taxation---A Reappraisal

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• 研討會日期 : 2018-06-05
• 時間 : 14:30
• 主講人 : Dr. Yi-Li Chien (簡怡立)
• 主持人 : Professor Cheng-Chen Yang
• 地點 : Conference Room B110
• 演講者簡介 : Dr. Chien received his Ph.D. in Economics at University of California, Los Angeles in 2006. He is currently a Senior Economist at Federal Reserve Bank of St. Louis. His research interests are Macroeconomics, Household Finance and Asset Pricing, Asymmetric Information and Dynamic Contracting.
• 演講摘要 : This paper uses a tractable model of heterogeneous agents with incomplete markets to address a set of long-standing issues in the optimal Ramsey capital taxation literature. The tractability of our model enables us to analytically study the trade-off facing the Ramsey planner between aggregate allocative efficiency (in terms of the modified golden rule) and individual allocative efficiency (in terms of self-insurance). Facing this trade-off, the Ramsey planner prefers issuing debt rather than taxing capital to correct the capital-overaccumulation problem. In particular, the planner always intends to supply enough bonds to crowd out capital on the one hand and relax individuals' borrowing constraints on the other hand to simultaneously achieve the modified golden rule and full self-insurance. Public debt is financed by labor income tax as it is less distortionary than a capital tax. Thus, capital taxation is not the optimal tool to achieve aggregate allocative efficiency despite overaccumulation of capital---because capital tax tightens individual borrowing constraints and deteriorates individual allocative efficiency. Consequently, facing the trade-off the Ramsey optimal capital tax can be zero, positive, or even negative, depending on the planner's ability to issue debt. So in a Ramsey equilibrium the modified golden rule can fail to hold whenever the government encounters a debt-limit. Finally, the planner's desire to relax individuals' borrowing constraints may lead to an ever-increasing debt level, resulting in a dynamic path featuring no interior steady state.