TY - JOUR
T1 - Progressive taxation and macroeconomic stability in two-sector models with social constant returns
AU - Chen, Been Lon
AU - Hsu, Mei
AU - Hsu, Yu Shan
N1 - Publisher Copyright:
© 2018, Springer-Verlag GmbH Austria, part of Springer Nature.
PY - 2018/9/1
Y1 - 2018/9/1
N2 - 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.
AB - 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.
KW - Indeterminacy
KW - No-income-effect utility
KW - Progressive income taxes
KW - Social constant returns
KW - Two-sector model
UR - https://www.scopus.com/pages/publications/85040903922
UR - https://www.scopus.com/pages/publications/85040903922#tab=citedBy
U2 - 10.1007/s00712-018-0596-2
DO - 10.1007/s00712-018-0596-2
M3 - Article
AN - SCOPUS:85040903922
SN - 0931-8658
VL - 125
SP - 51
EP - 68
JO - Journal of Economics/ Zeitschrift fur Nationalokonomie
JF - Journal of Economics/ Zeitschrift fur Nationalokonomie
IS - 1
ER -