Discussion Papers 2017

CIRJE-F-1041	"Do Consumption Externalities Correspond to the Indivisible Tax Rates on Consumpiton?"
Author Name	Gokan, Yoichi
Date	March 2017
Full Paper	PDF file
Remarks

Abstract
This paper puts the apperantly dfferent distortions of consumption externalities and endogenous consumption taxes to work in the one-sector Ramsey model without any distortions. We will prove that the two distortions can have similar or possibly exact same dynamic impacts on the aggregate economy, only if we use very familiar preferences in macro-dynamic literature. These two distortions analytically have a very close similarity as the obstacle distorting a market equilibrium path and consumption externalities seem the invisible tax rates (transefer rates) on consumption for positive (negative) external effects.
Keywords:

Abstract

This paper puts the apperantly dfferent distortions of consumption externalities and endogenous consumption taxes to work in the one-sector Ramsey model without any distortions. We will prove that the two distortions can have similar or possibly exact same dynamic impacts on the aggregate economy, only if we use very familiar preferences in macro-dynamic literature. These two distortions analytically have a very close similarity as the obstacle distorting a market equilibrium path and consumption externalities seem the invisible tax rates (transefer rates) on consumption for positive (negative) external effects.

Keywords: