It has been shown that, in the two-sector Benhabib–Farmer–Guo model with technologies of social increasing returns that exhibits indeterminacy, progressive income taxes de-stabilize the economy. This paper revisits the robustness of the tax implication in the two-sector Benhabib–Nishimura model with technologies of social constant returns that exhibits indeterminacy. We show that a progressive income tax stabilizes the economy against sunspot fluctuations, and thus the tax implication based on the two-sector Benhabib–Farmer–Guo model is not robust.
|頁（從 - 到）||51-68|
|期刊||Journal of Economics/ Zeitschrift fur Nationalokonomie|
|出版狀態||已發佈 - 2018 九月 1|
ASJC Scopus subject areas
- Business, Management and Accounting(all)
- Economics and Econometrics