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dc.contributor.authorTRABANDT, Mathias
dc.date.accessioned2007-12-14T08:48:36Z
dc.date.available2007-12-14T08:48:36Z
dc.date.issued2007
dc.identifier.issn1725-6704
dc.identifier.urihttps://hdl.handle.net/1814/7662
dc.description.abstractDomeij and Klein (2005) have shown that the welfare gains of an optimal capital and labor income tax reform decline the longer the reform is pre-announced before its implementation. In other words, pre-announcement is costly in terms of welfare. I reexamine their claim by taking two additional features of government spending into account: public goods and public capital. In my baseline optimal reform, I show that valuable and productive government spending is likely to reduce the welfare costs of pre-announcement. Further, the baseline optimal pre-announced reform displays short-run confiscation and/or subsidy of capital and labor income. As a further contribution, I show that these short-run properties are not important for the welfare gains of pre-announced reforms with sufficiently long pre-announcement duration. In particular, a 4 years pre-announced suboptimal reform in which taxes move - without confiscation and subsidy - directly to their endogenous long-run values at the implementation date generates similar welfare gains as the 4 years preannounced baseline optimal reform. The underlying tax structure of both reforms, however, appears to be very different.en
dc.format.mimetypeapplication/pdf
dc.language.isoenen
dc.publisherEuropean University Institute
dc.relation.ispartofseriesEUI ECOen
dc.relation.ispartofseries2007/52en
dc.rightsinfo:eu-repo/semantics/openAccess
dc.subjectPre-announced optimal tax reformen
dc.subjectPublic goodsen
dc.subjectPublic capitalen
dc.subjectConfiscationen
dc.subjectSubsidyen
dc.subjectWelfareen
dc.subjectE0en
dc.subjectE6en
dc.subjectH0en
dc.titleOptimal Pre-Announced Tax Reform Revisiteden
dc.typeWorking Paperen
dc.neeo.contributorTRABANDT|Mathias|aut|
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