Working Paper

Optimal income tax in a monetary economy

Abstract: This study examines the shape of an optimal income tax schedule in a monetary economy. In equilibrium, money?s role is to allocate resources across generations, while a tax-transfer scheme serves as a form of social insurance. It is found that the optimal real income tax with money can be progressive.

Status: Published in Journal of Economic Dynamics and Control (Vol. 17, No. 3, May 1993, pp. 443-465)

Bibliographic Information

Provider: Federal Reserve Bank of Minneapolis

Part of Series: Working Papers

Publication Date: 1984

Number: 244