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Linearly Progressive Income Taxes and Stabilization

Abstract : It has been shown that progressive income taxes may lead to saddle-point convergence when the marginal tax rate is assumed to be a continuously increasing function of income. This note shows that linearly progressive taxes may also immunize the economy against indeterminacy and sunspot equilibria. Therefore, our analysis suggests that exemption thresholds, as featured by prevailing tax codes, may help to stabilize the economy.
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https://halshs.archives-ouvertes.fr/halshs-00641124
Contributor : Nicolas Dromel <>
Submitted on : Monday, November 14, 2011 - 10:00:55 PM
Last modification on : Friday, July 17, 2020 - 9:54:21 AM

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  • HAL Id : halshs-00641124, version 1

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Nicolas Dromel, Patrick-Antoine Pintus. Linearly Progressive Income Taxes and Stabilization. Research in Economics, Elsevier, 2007, 61 (1), pp.25-29. ⟨halshs-00641124⟩

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