FISCAL POLICY WITH INTERTEMPORALLY NON-SEPARABLE PREFERENCES

Pedro Gomis-Porqueras and Luca Bossi

ANU Working Papers in Economics and Econometrics from Australian National University, College of Business and Economics, School of Economics

Abstract: In this paper, we show that Ricardian equivalence does not hold in a representative agent framework if one considers goods whose current consumption affect future marginal utilities. We find that, when the intertemporal elasticity of substitution changes over time, the timing of lump sum taxation has an asymmetric effect on current and future consumption. This in turn induces distinctive welfare consequences even if the government and individual budget constraints are unchanged in present value terms.

JEL-codes: H2 H3 (search for similar items in EconPapers)
Pages: 13 Pages
Date: 2010-02
New Economics Papers: this item is included in nep-dge
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Fiscal Policy with Intertemporally Non-Separable Preferences (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:acb:cbeeco:2010-512

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