• A
  • A
  • A
  • ABC
  • ABC
  • ABC
  • А
  • А
  • А
  • А
  • А
Regular version of the site

Working paper

Оптимальная политика без экспроприации

Arefiev N.
We argue that the result of dynamic inconsistency of optimal policy is based on an unrealistic assumption that expropriations of property rights or defaults of government debt may be optimal. If we pose an exogenous constraint, which forbids all implicit forms of government debt defaults or expropriations, we get that optimal policy is always dynamically consistent. We demonstrate this result in the Chamley-Judd’s framework of an optimal capital taxation problem. We show that under the No Implied Default Condition optimal policy starts with a revision of consumption and labour taxes, afterwards all taxes are about constant and the capital income tax is about zero. The No Implied Default Condition, which guarantees property rights and dynamic consistency, requires that household’s wealth be considered as predetermined in the same units as the household’s objective function.