京都大学 大学院経済学研究科・経済学部

(Title)

"Optimal Fiscal Policy With Heterogeneous Agents and Capital: Should We Increase or Decrease Public Debt and Capital Taxes?"

Abstract: We analyze optimal fiscal policy in a heterogeneous-agent model with capital accumulation and aggregate shocks, where the government uses public debt, capital tax, and progressive labor tax to finance public spending. First, we show that a steady-state equilibrium with positive capital tax can exist, but it depends on the utility function. Second, we show theoretically and quantitatively that the optimal dynamics of public debt depend crucially on the persistence of the positive public spending shock, for a given net present value of the shock; the optimal public debt increases (resp. decreases) when the persistence of the shock is low (resp. high) because of a trade-off between consumption smoothing and the reduction of distortions. Third, labor tax progressivity increases after such a shock.

Speaker’s website：https://xavier-ragot.fr/