Sequential equilibria in a Ramsey tax model

Christopher Phelan, Ennio Stacchetti

Research output: Contribution to journalArticlepeer-review

72 Scopus citations

Abstract

This paper presents a full characterization of the equilibrium value set of a Ramsey tax model. More generally, it develops a dynamic programming method for a class of policy games between the government and a continuum of households. By selectively incorporating Euler conditions into a strategic dynamic programming framework, we wed two technologies that are usually considered competing alternatives, resulting in a substantial simplification of the problem.

Original languageEnglish (US)
Pages (from-to)1491-1518
Number of pages28
JournalEconometrica
Volume69
Issue number6
DOIs
StatePublished - 2001

Keywords

  • Capital taxation
  • Government credibility
  • Recursive methods
  • Time consistent government policy

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