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[1] In an allocation that solves the Ramsey problem and that levies distorting\n", "taxes on labor, why would the government ever want to hand revenues back\n", "to the private sector? It would not in an economy with state-contingent debt, since\n", "any such allocation could be improved by lowering distortionary taxes\n", "rather than handing out lump-sum transfers. But, without state-contingent\n", "debt there can be circumstances when a government would like to make\n", "lump-sum transfers to the private sector.\n", "\n", "
[2] From the first-order conditions for the Ramsey\n", "problem, there exists another realization $ \\tilde s^t $ with\n", "the same history up until the previous period, i.e., $ \\tilde s^{t-1}=\n", "s^{t-1} $, but where the multiplier on constraint [(11)](#equation-amss-46) takes a positive value, so\n", "$ \\gamma_t(\\tilde s^t)>0 $." ] } ], "metadata": { "date": 1624431168.994837, "filename": "amss.rst", "kernelspec": { "display_name": "Python", "language": "python3", "name": "python3" }, "next_doc": { "link": "amss2", "title": "Fluctuating Interest Rates Deliver Fiscal Insurance" }, "prev_doc": { "link": "opt_tax_recur", "title": "Optimal Taxation with State-Contingent Debt" }, "title": "Optimal Taxation without State-Contingent Debt" }, "nbformat": 4, "nbformat_minor": 2 }