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Main Title: Infrastructure and inequality
Subtitle: insights from incorporating key economic facts about household heterogeneity
Author(s): Klenert, David Christian
Mattauch, Linus
Edenhofer, Ottmar
Lessmann, Kai
Type: Article
Language Code: en
Is Part Of: 10.14279/depositonce-5567
Abstract: We study the impacts of investment in public capital on equity and efficiency. Taking into account stylized facts on wealth accumulation, we model agent heterogeneity through differences in saving behavior, income source and time preference. We find that in the long run, public investment is Pareto-improving and that it reduces inequality in wealth, welfare and income at the same time, if it is financed by a capital tax. Consumption tax financing is also Pareto-improving but distribution-neutral. Only for labor tax financing, a trade-off between equity and efficiency occurs. Additionally we find that agents differ in their preferred tax rates. The results for capital and labor tax financing are valid for both, the case of decreasing and constant returns to accumulable factors.
Issue Date: 2016
Date Available: 20-Jan-2017
DDC Class: 330 Wirtschaft
336 Öffentliche Finanzen
Subject(s): public capital
heterogeneous saving
Journal Title: Macroeconomic dynamics
Publisher: Cambridge Univ. Press
Publisher Place: Cambridge
Publisher DOI: 10.1017/S1365100516000432
EISSN: 1469-8056
ISSN: 1365-1005
Appears in Collections:Inst. Landschaftsarchitektur und Umweltplanung » Publications

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