Stylianos Asimakopoulos (Nottingham) -The optimal distribution of the tax burden over the business cycle

Date(s): Thursday 20th November 2014 (14:00-15:30)
Description: The speaker will be Stylianos Asimakopoulos from the University of Nottingham. His presentation will be entitled "The optimal distribution of the tax burden over the business cycle"

Abstract:
“This paper analyses optimal income taxes over the business cycle for unskilled low and middle income households as well as skilled high income households and examines the implications of a balanced-budget restriction for government policy. A model incorporating capital-skill complementarity in production and differential access to capital and labour markets is developed to capture the cyclical characteristics of the US economy, as well as the empirical observations on wage (skill premium) and wealth inequality. We find that the tax rate on the income of the middle income households is optimally more volatile than the remaining taxes. Moreover, this tax becomes significantly more volatile under the balanced-budget restriction. We also find that the debt restriction has small effects on the cyclical properties of the income tax rate on the high-income households, but significantly increases the counter-cyclicality of income taxes applying to the unskilled households.”

Centre for Finance, Credit and Macroeconomics

Sir Clive Granger Building
University of Nottingham
University Park
Nottingham, NG7 2RD

Enquiries: hilary.hughes@nottingham.ac.uk