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Main Title: Distributional effects of public investment when wealth and classes are back
Author(s): Mattauch, Linus
Edenhofer, Ottmar
Klenert, David Christian
Bénard, Sophie
Type: Article
Language Code: en
Is Part Of: 10.14279/depositonce-5567
Abstract: In developed economies, wealth inequality is high, while public capital is underprovided. Here, we study the impact of heterogeneity in saving behavior and income sources on the distributional effects of public investment. A capital tax is levied to finance productive public capital in an economy with two types of households: high income households who save dynastically and middle income households who save for retirement. We find that inequality is reduced the higher the capital tax rate is and that low tax rates are Pareto-improving. There is no clear-cut trade-off between efficiency and equality: middle income households' consumption is maximal at a capital tax rate that is higher than the rate which maximizes high income households' consumption.
Issue Date: 2016
Date Available: 19-Jan-2017
DDC Class: 330 Wirtschaft
336 Öffentliche Finanzen
Subject(s): public capital
wealth disparity
household heterogeneity
Pasinetti Theorem
saving behavior
Journal Title: Metroeconomica
Publisher: Wiley-Blackwell
Publisher Place: Oxford [u.a.]
Volume: 67
Issue: 3
Publisher DOI: 10.1111/meca.12117
Page Start: 603
Page End: 629
EISSN: 1467-999X
ISSN: 0026-1386
Appears in Collections:Inst. Landschaftsarchitektur und Umweltplanung » Publications

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