Sub-Optimality of the Friedman Rule with Distorting Taxes

Detalhes bibliográficos
Autor(a) principal: Adão, Bernardino
Data de Publicação: 2017
Outros Autores: Silva, André C.
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
Texto Completo: http://hdl.handle.net/10362/82729
Resumo: We find that the Friedman rule is not optimal with government transfers and distortionary taxation. This result holds for heterogeneous agents, standard homogeneous preferences, and constant returns to scale production functions. The presence of transfers changes the standard optimal taxation result of uniform taxation. As transfers cannot be taxed, a positive nominal net interest rate is the indirect way to tax the additional income derived from transfers. The higher the transfers, the higher is the optimal inflation rate. We calibrate a model with transfers to the US economy and obtain optimal values for inflation substantially above the Friedman rule.
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spelling Sub-Optimality of the Friedman Rule with Distorting TaxesFriedman ruleFiscal policyMonetary policyTaxesTransfersInflationWe find that the Friedman rule is not optimal with government transfers and distortionary taxation. This result holds for heterogeneous agents, standard homogeneous preferences, and constant returns to scale production functions. The presence of transfers changes the standard optimal taxation result of uniform taxation. As transfers cannot be taxed, a positive nominal net interest rate is the indirect way to tax the additional income derived from transfers. The higher the transfers, the higher is the optimal inflation rate. We calibrate a model with transfers to the US economy and obtain optimal values for inflation substantially above the Friedman rule.Nova SBERUNAdão, BernardinoSilva, André C.2019-09-30T11:25:58Z2017-022017-02-01T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10362/82729engAdão, Bernardino and Silva, André, Sub-Optimality of the Friedman Rule with Distorting Taxes (February 2017). FEUNL Working Paper Series No. 632info:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2024-03-11T04:36:40Zoai:run.unl.pt:10362/82729Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-20T03:36:11.995752Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse
dc.title.none.fl_str_mv Sub-Optimality of the Friedman Rule with Distorting Taxes
title Sub-Optimality of the Friedman Rule with Distorting Taxes
spellingShingle Sub-Optimality of the Friedman Rule with Distorting Taxes
Adão, Bernardino
Friedman rule
Fiscal policy
Monetary policy
Taxes
Transfers
Inflation
title_short Sub-Optimality of the Friedman Rule with Distorting Taxes
title_full Sub-Optimality of the Friedman Rule with Distorting Taxes
title_fullStr Sub-Optimality of the Friedman Rule with Distorting Taxes
title_full_unstemmed Sub-Optimality of the Friedman Rule with Distorting Taxes
title_sort Sub-Optimality of the Friedman Rule with Distorting Taxes
author Adão, Bernardino
author_facet Adão, Bernardino
Silva, André C.
author_role author
author2 Silva, André C.
author2_role author
dc.contributor.none.fl_str_mv RUN
dc.contributor.author.fl_str_mv Adão, Bernardino
Silva, André C.
dc.subject.por.fl_str_mv Friedman rule
Fiscal policy
Monetary policy
Taxes
Transfers
Inflation
topic Friedman rule
Fiscal policy
Monetary policy
Taxes
Transfers
Inflation
description We find that the Friedman rule is not optimal with government transfers and distortionary taxation. This result holds for heterogeneous agents, standard homogeneous preferences, and constant returns to scale production functions. The presence of transfers changes the standard optimal taxation result of uniform taxation. As transfers cannot be taxed, a positive nominal net interest rate is the indirect way to tax the additional income derived from transfers. The higher the transfers, the higher is the optimal inflation rate. We calibrate a model with transfers to the US economy and obtain optimal values for inflation substantially above the Friedman rule.
publishDate 2017
dc.date.none.fl_str_mv 2017-02
2017-02-01T00:00:00Z
2019-09-30T11:25:58Z
dc.type.status.fl_str_mv info:eu-repo/semantics/publishedVersion
dc.type.driver.fl_str_mv info:eu-repo/semantics/article
format article
status_str publishedVersion
dc.identifier.uri.fl_str_mv http://hdl.handle.net/10362/82729
url http://hdl.handle.net/10362/82729
dc.language.iso.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv Adão, Bernardino and Silva, André, Sub-Optimality of the Friedman Rule with Distorting Taxes (February 2017). FEUNL Working Paper Series No. 632
dc.rights.driver.fl_str_mv info:eu-repo/semantics/openAccess
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv Nova SBE
publisher.none.fl_str_mv Nova SBE
dc.source.none.fl_str_mv reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação
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collection Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
repository.name.fl_str_mv Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação
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