Optimal government policies in models with heterogeneous agents

• 成果类型: Article
• 署名作者: Bohacek, Radim; Kejak, Michal
• 署名单位: Charles University Prague; Czech Academy of Sciences; Economics Institute of the Czech Academy of Sciences
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2018.05.008
• 发表日期: 2018
• 页码: 834-858
• 关键词: Macroeconomic policy; optimal taxation; Computational techniques; Distribution of wealth and income

摘要

In this paper we develop a new approach for finding optimal government policies in economies with heterogeneous agents. Using the calculus of variations, we present three classes of equilibrium conditions from government's and individual agent's optimization problems: 1) the first order conditions: the government's Lagrange-Euler equation and the individual agent's Euler equation; 2) the stationarity condition on the distribution function; and, 3) the aggregate market clearing conditions. These conditions form a system of functional equations which we solve numerically. The solution takes into account simultaneously the effect of the government policy on individual allocations, the resulting optimal distribution of agents in the steady state and, therefore, equilibrium prices. We illustrate the methodology on a Ramsey problem with heterogeneous agents, finding the optimal limiting tax on total income. (C) 2018 Elsevier Inc. All rights reserved.