A tale of tax policies in open economies

• Autores: Stéphane Auray, Aurélien Eyquem, Paul Gomme
• Localización: International economic review, ISSN-e 1468-2354, Vol. 57, Nº. 4, 2016, págs. 1299-1333
• Idioma: inglés
• Texto completo no disponible (Saber más ...)
• Resumen

  • To evaluate fiscal policy reforms for Euro-area countries, this article develops and calibrates a small open economy model. Debt reduction reforms require higher tax rates in the short term in exchange for lower rates in the long term as the debt-servicing burden falls. Using the capital income tax to implement such a policy leads to welfare gains; the consumption tax, a very small welfare gain; and the labor income tax, a welfare loss. Holding fixed the long-run debt-output ratio, offsetting a lower capital income tax with either a higher labor income or consumption tax generally yields welfare gains. [ABSTRACT FROM AUTHOR]