Regular ArticleTax Policy and Stability in a Model with Sector-Specific Externalities☆
References (18)
- et al.
Indeterminacy and Increasing Returns
Journal of Economic Theory
(1994) - et al.
Indeterminacy and Sunspots in Macroeconomics
- et al.
Indeterminacy with Non-Separable Utility
Journal of Economic Theory
(2000) - et al.
Real Business Cycles and the Animal Spirits Hypothesis
Journal of Economic Theory
(1994) - et al.
Indeterminacy and Stabilization Policy
Journal of Economic Theory
(1998) - et al.
Growth and Business Cycles I. The Basic Neoclassical Model
Journal of Monetary Economics
(1988) Indeterminacy, Home Production and the Business Cycle: A Calibrated Analysis
Journal of Monetary Economics
(1998)Animal Spirits, Technology Shocks and the Business Cycle
Journal of Economic Dynamics and Control
(2000)
Cited by (30)
Corporate social responsibility, social optimum, and the environment-growth tradeoff
2022, Resource and Energy EconomicsCitation Excerpt :On the consumption side, we set the time preference rate as ρ = 0.04, which is commonly used in the literature (e.g., Barro, 2015 and the 2018 UK HM Treasury’s Green Book). In line with Guo and Harrison (2001), we set σ = 0.1, implying that the Frisch elasticity of labor supply is 10, which reflects an elastic labor supply in the real business cycle model. On the production side, the capital share in the production function is set as α = 0.3, as in Barro and Sala-i-Martin (2004) and Piketty et al. (2018).
On the optimality of social status seeking
2020, Economic ModellingCitation Excerpt :We set the share of capital income as α = 0.3, as in Barro and Sala-i-Martin (2004), and set the parameter of the capital adjustment cost as h = 16, as in Osang and Turnovsky (2000). Moreover, the government spending-to-output ratio is assumed to be θ = 0.1 which is within a reasonable range of between 0.05 and 0.35, as noted by Guo and Harrison (2001). We assume that β = 0.4 such that the share of productive government spending in the production function is 1 − α − β = 0.3.
Income Taxation Rules and Stability of a Small Open Economy
2020, Journal of MacroeconomicsStabilization policy and indeterminacy in a small open economy
2020, Economic ModellingCitation Excerpt :By contrast, a regressive tax rule can increase the tendency for indeterminacy to occur. However, in the two-sector closed economy studied by Benhabib and Farmer (1996), Guo and Harrison (2001) showed that a regressive tax policy can stabilize the economy when sufficiently strong investment externalities and a balanced budget are considered. By contrast, a progressive tax rule can increase the tendency for indeterminacy to occur in the same environment.
Progressive taxation and macroeconomic (in)stability with utility-generating government spending
2014, Journal of MacroeconomicsIndeterminacy, labor and capital income taxes, and non-linear tax schedules
2013, Journal of MacroeconomicsCitation Excerpt :Accordingly, progressive income taxes stabilize the economy by making indeterminacy less likely. Finally, using the two-sector model, Guo and Harrison (2001) drew a conclusion contrary to the one-sector model in their view that progressive income taxes raise the probability of indeterminacy for most reasonable values of production externalities. A common feature in Guo and Lansing (1998) and Guo and Harrison (2001) is that there is no attempt to distinguish between labor and capital income taxes.1
- ☆
For helpful comments and suggestions, we thank Kevin Lansing, an anonymous referee, and seminar participants at the 1999 Midwest Macroeconomics Conference, 1999 SED Meetings, 1999 WEA Conference, 2000 MEA Meetings, 8th World Congress of the Econometric Society, University of Connecticut, University of Delaware, and Federal Reserve Bank of Chicago. All remaining errors are our own.
- 2
To whom correspondence should be addressed.