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  • Open Daily: 10am - 10pm
    Alley-side Pickup: 10am - 7pm

    3038 Hennepin Ave Minneapolis, MN
    612-822-4611

Open Daily: 10am - 10pm | Alley-side Pickup: 10am - 7pm
3038 Hennepin Ave Minneapolis, MN
612-822-4611
Finance and Economics Discussion Series: Welfare Effects of Tax Policy in Open Economies: Stabilization and Cooperation

Finance and Economics Discussion Series: Welfare Effects of Tax Policy in Open Economies: Stabilization and Cooperation

Kim, Jinill
Kim, Sunghyun Henry
United States Federal Reserve Board

Paperback

General Political Science

Publisher Price: $15.75

ISBN10: 1288713878
ISBN13: 9781288713875
Publisher: Bibliogov
Published: Feb 6 2013
Pages: 36
Weight: 0.18
Height: 0.07 Width: 7.44 Depth: 9.69
Language: English
This paper studies an international tax policy design problem by employing a two-country dynamic general equilibrium model with incomplete asset markets. We investigate the possibility of welfareimproving active tax policies, in particular capital and labor income tax, under the non-cooperative Nash equilibrium and the cooperative equilibrium. Unlike the conventional wisdom regarding stabilization policies, optimal tax policies in our economy are procyclical. Relative to the non-cooperative setting, international tax policy cooperation requires more active tax policies (about two times) and generates large extra welfare gains (by about a third).

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