Scandinavian Working Papers in Economics

Working Paper Series, Center for Fiscal Studies,
Uppsala University, Department of Economics

No 2012:9: The Friedman rule in an overlapping-generations model with nonlinear taxation and income misreporting

Firouz Gahvari () and Luca Micheletto ()
Additional contact information
Firouz Gahvari: Department of Economics, Postal: University of Illinois at Urbana-Champaign, USA
Luca Micheletto: Uppsala Center for Fiscal Studies, Postal: Department of Economics, Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden

Abstract: This paper models an overlapping-generations economy that includes money and is populated with individuals of different skills. They face a nonlinear income tax schedule and can engage in tax evasion. Money serves two purposes: the traditional one, modeled through a money-in-the-utility-function, and to facilitate tax evasion. It shows that income tax evasion leads to the violation of the Friedman rule that will otherwise hold.

Keywords: Monetary policy; fiscal policy; redistribution; the Friedman rule; tax evasion; overlapping-generations; second best

JEL-codes: E52; H21

36 pages, First version: June 27, 2012. Revised: June 5, 2014.

Full text files

FULLTEXT02.pdf PDF-file 

Download statistics

Questions (including download problems) about the papers in this series should be directed to Katarina Grönvall ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2024-02-05 17:13:54.