Effects of tax policy in a life-cycle model with asset illiquidity
2
조회
0
다운로드
0
인용
0
참고문헌
키워드
초록
This study proposes a general equilibrium life-cycle model where households make labor supply decisions and smooth consumption using one asset. This asset involves a stochastic adjustment cost. A recession arises when the tax revenue generated from a tax hike is spent as government expenditures. A prolonged expansion occurs when the revenue is distributed as transfers, especially to older and lower income households with higher savings. The tax hike invariably leads to recession when the adjustment cost is absent. Thus, how tax revenue is spent can significantly affect the aggregate economy once asset illiquidity is considered.
Abstract
This study proposes a general equilibrium life-cycle model where households make labor supply decisions and smooth consumption using one asset. This asset involves a stochastic adjustment cost. A recession arises when the tax revenue generated from a tax hike is spent as government expenditures. A prolonged expansion occurs when the revenue is distributed as transfers, especially to older and lower income households with higher savings. The tax hike invariably leads to recession when the adjustment cost is absent. Thus, how tax revenue is spent can significantly affect the aggregate economy once asset illiquidity is considered.
참고문헌 (9)
- The economic stimulus payments of 2008 and the aggregate demand for consumption, "Broda, C", National Bureau of Economic Research, ~, pp.NBER Working paper 20122 (2014)
- Credit crisis, precautionary savings, and the liquidity trap, "Guerrieri, V", National Bureau of Economic Research, ~, pp.NBER Working paper 17583 (2011)
- Heathcote, J., "Fiscal policy with heterogeneous agents and incomplete markets", Review of Economic Studies, 72(1), pp.161~188 (2005)
- Heckman, J., "Micro data, heterogeneity, and the evaluation of public policy: Nobel lecture", Journal of Political Economy, 109(4), pp.673~748 (2001)
- Kaplan, G., "A model of the consumption response to fiscal stimulus payments", Econometrica, 82(4), pp.1199~1239 (2014)
- Kiefer, D., "The economic growth and tax relief reconciliation act of 2001: Overview and assessment of effects on taxpayers", National Tax Journal, 55, pp.89~117 (2002)
- Lusardi, A., "Financially fragile households: Evidence and implications", Brookings Papers on Economic Activity, (Spring), pp.83~150 (2011)
- Misra, K., "Consumption, income changes, and heterogeneity: Evidence from two fiscal stimulus programs", American Economic Journal: Macroeconomics, 6(4), pp.84~106 (2014)
- Parker, J., "Consumer spending and the economic stimulus payments of 2008", American Economic Review, 103(6), pp.2530~2553 (2013)