Working papers:
Intertemporal distortions in the second best
Stefania Albanesi; Roc Armenter
Downloads:
- Title:
- Intertemporal distortions in the second best
- Author(s):
-
Albanesi, Stefania
Armenter, Roc - Date:
- 2007
- Type:
- Working papers
- Department:
- Economics
- Permanent URL:
- http://hdl.handle.net/10022/AC:P:15438
- Series:
- Department of Economics Discussion Papers
- Part Number:
- 0708-08
- Publisher:
- Department of Economics, Columbia University
- Publisher Location:
- New York
- Abstract:
- We consider a very general class of public finance problems that encompasses Ramsey models of optimal taxation as well as economies with limited commitment, private information, and political economy frictions. We identify a sufficient condition to rule out permanent intertemporal distortions at the optimum: If there exists an admissible allocation that converges to the first best steady state, then all intertemporal distortions are temporary in the second best. We analyze a series of applications to illustrate the significance of this result.
- Subject(s):
-
Economics
Finance
- Item views:
- 162