Can Capital Income Tax Improve Welfare in an Incomplete Market Economy with a Labor-Leisure Decision?

This paper is a quantitative exercise in the economic analysis of optimal fiscal policy. We look at an incomplete market economy where agents face idiosyncratic labor productivity shocks and borrowing constraints. We find the steady state equilibrium of this economy and then analyze the effect of a...

Full description

Bibliographic Details
Main Author: Danijela Medak Fell
Format: Article
Published: Institute of Public Finance 2006-03-01
Series:Financial Theory and Practice
Online Access: