capital income taxation model - term 2 Flashcards
(15 cards)
what are the assumptions within the model for capital income taxation?
representative household that lives forever.
there is a single storable good
preferences
output is produced by a representative from using capital only. only source of income is from capital
capital depreciates at a rate δ between 0 and 1. it can be accumulated although it takes time
what is the law of motion for the capital stock?
what is the budget constraint for the capital income taxation model
what are the two types of tax policies analysed within the capital income taxation model?
what is the problem of the household within the capital income taxation model when capital is exempt from taxation?
what is the lagrangian and the first order conditions for the capital income taxation model when capital is exempt from taxation
how do you derive the euler equation from the lagrangian first order condtitons for the capital income taxation model when capital is exempt from taxation?
what is the euler equation at the steady state for the capital income taxation model when capital is exempt from taxation?
what is the value for the steady state capital stock for the capital income taxation model when capital is exempt from taxation?
this is solved from rearranging the euler equation at the steady state
what is the value for the steady state output for the capital income taxation model when capital is exempt from taxation?
what is the budget constraint for the capital income taxation model when investment is exempt from taxation?
what is the problem of the household in the capital income taxation model when investment is exempt from taxation?
what is the lagrangian form of problem of the household in the capital income taxation model when investment is exempt from taxation?
what two formulas are derived from the first order conditions when investment is exempt from taxation?
at the steady state, what is the euler equation when investment is exempt from taxation?
