Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
984513 | Research in Economics | 2007 | 5 Pages |
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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Social Sciences and Humanities
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Economics and Econometrics
Authors
Nicolas L. Dromel, Patrick A. Pintus,