Sequential equilibria in a Ramsey tax model

Christopher Phelan, Ennio Stacchetti

    Research output: Contribution to journalArticlepeer-review

    Abstract

    This paper presents a full characterization of the equilibrium value set of a Ramsey tax model. More generally, it develops a dynamic programming method for a class of policy games between the government and a continuum of households. By selectively incorporating Euler conditions into a strategic dynamic programming framework, we wed two technologies that are usually considered competing alternatives, resulting in a substantial simplification of the problem.

    Original languageEnglish (US)
    Pages (from-to)1491-1518
    Number of pages28
    JournalEconometrica
    Volume69
    Issue number6
    DOIs
    StatePublished - 2001

    Keywords

    • Capital taxation
    • Government credibility
    • Recursive methods
    • Time consistent government policy

    ASJC Scopus subject areas

    • Economics and Econometrics

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