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Main Title: Infrastructure and inequality: insights from incorporating key economic facts about household heterogeneity
Author(s): Klenert, David
Mattauch, Linus
Edenhofer, Ottmar
Lessmann, Kai
Type: Article
Language Code: en
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: 23-Nov-2017
DDC Class: 330 Wirtschaft
Subject(s): distribution
heterogeneous saving
public capital
Journal Title: Macroeconomic dynamics
Publisher: Cambridge University Press
Publisher Place: Cambridge
Publisher DOI: 10.1017/s1365100516000432
Page Start: 1
Page End: 32
EISSN: 1469-8056
ISSN: 1365-1005
Notes: Dieser Beitrag ist mit Zustimmung des Rechteinhabers aufgrund einer (DFG geförderten) Allianz- bzw. Nationallizenz frei zugänglich.
This publication is with permission of the rights owner freely accessible due to an Alliance licence and a national licence (funded by the DFG, German Research Foundation) respectively.
Appears in Collections:FG Ökonomie des Klimawandels » Publications

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