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Title: Pareto-improving tax policies under hyperbolic discounting
Authors: Kang, Minwook
Keywords: Social sciences::Economic development
Issue Date: 2018
Source: Kang, M. (2018). Pareto-improving tax policies under hyperbolic discounting. International Tax and Public Finance, 26(3), 618-660.
Project: RG62/18
Journal: International Tax and Public Finance
Abstract: This paper investigates the welfare implications of tax policies in the economy with present-biased consumers. We show that consumption taxes, income subsidies, or capital subsidies can improve not only hyperbolically discounted intertemporal utilities, but also exponentially discounted commitment utilities. This finding implies that both consumers and the government can have incentives to adopt tax policies against present-biased decisions. All the results are shown in a three-period model with general utility and production functions. A steady-state analysis indicates that the proposed tax policy is effective in recovering the welfare/capital loss due to consumers’ present bias.
ISSN: 0927-5940
DOI: 10.1007/s10797-018-9527-y
Rights: © 2018 Springer Science+Business Media, LLC, part of Springer Nature. All rights reserved.
Fulltext Permission: none
Fulltext Availability: No Fulltext
Appears in Collections:SSS Journal Articles

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