Pré-Publication, Document De Travail Année : 2012

Destabilizing Balanced-Budget Consumption Taxes in Multi-Sector Economies

Résumé

We examine the impact of balanced-budget consumption taxes on the existence of expectations-driven business cycles in two-sector economies with infinitely-lived households. We prove that, whatever the relative capital intensity difference across sectors, aggregate instability can occur if the consumption tax rate is not too low. Moreover, we show through a numerical exercise based on empirically plausible tax rates that endogenous business-cycle fluctuations may be a source of instability for all OECD countries, including the US.

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halshs-00796685 , version 1 (04-03-2013)

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  • HAL Id : halshs-00796685 , version 1

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Kazuo Nishimura, Carine Nourry, Thomas Seegmuller, Alain Venditti. Destabilizing Balanced-Budget Consumption Taxes in Multi-Sector Economies. 2012. ⟨halshs-00796685⟩
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