Optimal Intertemporal Taxationon Consumption and the Term Structure of Government Debt.

This paper addresses the time-consistency problem of optimal policy when intertemporal prices are inflexible. For small, open economies facing given world interest rates, it shows that a consumption tax, rather than a tax on wage income, is time-consistent under a variety of circumstances, even incl...

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Bibliographic Details
Corporate Author: International Monetary Fund
Format: Journal
Language:English
Published: Washington, D.C. : International Monetary Fund, 1988.
Series:IMF Working Papers; Working Paper ; No. 1988/115
Online Access:Full text available on IMF
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245 1 0 |a Optimal Intertemporal Taxationon Consumption and the Term Structure of Government Debt. 
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300 |a 1 online resource (20 pages) 
490 1 |a IMF Working Papers 
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500 |a <strong>On-Campus Access:</strong> No User ID or Password Required 
506 |a Electronic access restricted to authorized BRAC University faculty, staff and students 
520 3 |a This paper addresses the time-consistency problem of optimal policy when intertemporal prices are inflexible. For small, open economies facing given world interest rates, it shows that a consumption tax, rather than a tax on wage income, is time-consistent under a variety of circumstances, even including some cases where the optimal tax rate is not constant over time. This result, when it applies, restores the neutrality of the term structure of government debt, and reaffirms the tax-smoothing theory of debt determination. 
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830 0 |a IMF Working Papers; Working Paper ;  |v No. 1988/115 
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