Many recent studies have argued that it is useful to introduce a third input into the neoclassical production technology which encapsulates productivity enhancing knowledge created in process of production. This input, often called organizational capital, has been shown improve predictions dynamic general equilibrium models, especially at business cycle frequency. In this paper, we study impact...

In a standard model of the intertemporal labour supply/consumption/saving decision, with weak separability between consumption and leisure in each period; identical preferences across households; and a Mirrlees optimal nonlinear tax on labour earnings; the Atkinson-Stiglitz Theorem (AS) implies that there is no case for taxing future consumption and therefore the return to saving. An extension ...

There are multiple reasons to motivate the role of capital taxation in heterogenous-agent incomplete-markets (HAIM) model. One is production inefficiency caused by precautionary savings. The other wealth redistribution played taxation.

In this section we introduce a framework to study optimal linear capital taxation. We first focus on a two-period model, define the concept of intertemporal wedge and derive optimal capital taxes using the Atkinson Stiglitz result. We then move to an infinite horizon model with aggregate uncertainty and derive optimal taxes. Finally, we study a model with capitalists and workers and show that o...

This paper considers a Ramsey model of linear capital and labor income taxation in which the government cannot commit ex-ante to a sequence of policies for the future. In this setup, if the government is more impatient than the government, the capital income tax will always be positive in steady state. Thus, impatience and lack of commitment are able to generate positive capital taxes in the lo...