Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5099023 | Journal of Economic Dynamics and Control | 2015 | 15 Pages |
Abstract
The present paper examines the effects of consumption externalities on economic performance in a one-sector model with wealth preference. The presence of the wealth preference generates a wealth effect in consumption growth, which plays a crucial role for consumption externalities to have impacts on the economy. Our main findings are: (i) regardless of the assumption of inelastic labor supply, the distortionary effect of consumption externalities stays in the long run; (ii) the income tax as well as the consumption tax can modify the efficiency; and (iii) the numerical simulations supplement theoretical findings.
Related Topics
Physical Sciences and Engineering
Mathematics
Control and Optimization
Authors
Yasuhiro Nakamoto,