Optimal taxation and debt with uninsurable risks to human capital accumulation
Title: Optimal taxation and debt with uninsurable risks to human capital accumulation
Series/Number: EUI ECO; 2014/08
We consider an economy where individuals face uninsurable risks to their human capital accumulation, and study the problem of determining the optimal level of linear taxes on capital and labor income together with the optimal path of the debt level. We show both analytically and numerically that in the presence of such risks it is bene cial to tax both labor and capital income and to have positive government debt.
Subject: Ramsey equilibrium; Optimal taxation; Incomplete markets; Optimal public debt; D52; D60; D90; E20; E62; H21; O40
Type of Access: openAccess
Published version: http://hdl.handle.net/1814/38586