We provide a multiperiod model of political competition in which voters imperfectly observe the electoral promises made to other voters. Imperfect observability generates an incentive for candidates to offer excessive transfers even if voters are homogeneous and taxation is distortionary. Government spending is larger than in a world of perfect observability. Transfers are partly financed throu...

In models with a representative infinitely lived household, modern versions of tax smoothing imply that the steady-state of government debt should follow a random walk. This is unlikely to be the case in OLG economies, where, the equilibrium interest rate may differ from the policy-maker’s rate of time preference such that it may be optimal to reduce debt today to reduce distortionary taxation ...

In overlapping-generations economies with perfect financial markets and lumpsum taxation, restrictions on the government budget deficit do not limit the set of achievable allocations. For economies in which the tax instruments are distortionary and limited in number, this strong form of irrelevance does not hold even if markets are perfect. We propose a weaker (but natural) definition of irrele...

Among the distortions generated by inflation, those caused by its interaction with taxation are particularly important. Due to the non-indexation of the tax system, inflation exacerbates the inefficiencies generated by taxation. The aim of this paper is to evaluate the welfare effects of these distortions in New Zealand. By using a stylised model of the New Zealand tax system, the tax burden on...

When educational policy is supplemented by a redistributive income tax, and when individuals differ in their ability to benefit from education, the optimal policy is typically rather regressive. Resources are concentrated on the most able individuals in order to get a "cake" as big as possible to share among individuals through income taxation. In this paper we put forward another reason to pus...

Social optimization problems maximize the weighted sum of individual utilities over feasible allocations that satisfy certain constraints. In this paper, we propose a method that determines endogenous individual weights for such problems. We …rst provide three axioms which uniquely determine, for any welfare function, the contribution of a bundle of goods to that welfare function. We then de…ne...

BACKGROUND The distribution of cigarette prices has rarely been studied and compared under different tax structures. Descriptive evidence on price distributions by countries can shed light on opportunities for tax avoidance and brand switching under different tobacco tax structures, which could impact the effectiveness of increased taxation in reducing smoking. OBJECTIVE This paper aims to de...

BACKGROUND In Bangladesh, the average excise tax on cigarettes accounted for just 38% of the average retail price of cigarettes in 2009, and 45% in 2010. Both these rates are well below the WHO recommended share of 70% of the retail price at a minimum. There is thus ample room for raising taxes on cigarettes in Bangladesh. The objective of the present work was therefore to estimate the price el...

We investigate the distortionary effects of transaction taxes through a case study Scottish residential property market. make use four sources variation in tax rates present recent systems: (1) jumps liabilities at thresholds; (2) marginal (3) announcement that created temporary saving opportunities; and (4) shift to more progressive regime. Our results indicate market participants are highly r...

In a recent article, I demonstrated that, under standard simplifying assumptions, it is possible to finance a public good in a manner such that a Pareto improvement results whenever the simple cost-benefit test is satisfied -that is, without any adjustment for the “marginal cost of funds.” In particular, the method of finance involves adjusting the income tax so that the combined incidence of t...