Income and commodity taxes in a two‐good, two‐period model with heterogeneous preferences
Abstract
Explores tax structures in a two‐period, two‐good model, allowing for endogenous labour supplies. The model includes the specification of a joint distribution of wage rates facing individuals in the two periods. It also specifies a joint distribution of the various preference parameters used, allowing for the calibration such that the average proportion of expenditure on each good varies with (endogenous) income. This introduces distributional grounds for the use of a selective consumption tax, alongside an income tax, when maximizing a social welfare function displaying inequality aversion.
Keywords
Citation
Creedy, J. (1996), "Income and commodity taxes in a two‐good, two‐period model with heterogeneous preferences", Journal of Economic Studies, Vol. 23 No. 1, pp. 3-17. https://doi.org/10.1108/01443589610106516
Publisher
:MCB UP Ltd
Copyright © 1996, MCB UP Limited