Optimal government policies in models with heterogeneous agents
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- dc.contributor.author Bohácek, Radimca
- dc.contributor.author Kejak, Michalca
- dc.date.accessioned 2018-09-27T12:07:54Z
- dc.date.available 2018-09-27T12:07:54Z
- dc.date.issued 2018-04
- dc.description.abstract In this paper we develop a new approach for funding optimal government policies in economies with heterogeneous agents. Using the calculus of variations, we present three classes of equilibrium conditions from government's and individual agent's optimization problems: 1) the first order conditions: the government's Lagrange-Euler equation and the individual agent's Euler equation; 2) the stationarity condition on the distribution function; and, 3) the aggregate market clearing conditions. These conditions form a system of functional equations which we solve numerically. The solution takes into account simultaneously the e_ect of the government policy on individual allocations, the resulting optimal distribution of agents in the steady state and, therefore, equilibrium prices. We illustrate the methodology on a Ramsey problem with heterogeneous agents, finding the optimal limiting tax on total income.ca
- dc.description.sponsorship The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396.
- dc.format.mimetype application/pdfca
- dc.identifier.uri http://hdl.handle.net/10230/35524
- dc.language.iso engca
- dc.relation.ispartofseries ADEMU Working Paper Series;130
- dc.relation.projectID info:eu-repo/grantAgreement/EC/H2020/649396
- dc.rights This is an Open Access article distributed under the terms of the Creative Commons Attribution License Creative Commons Attribution 4.0 International, which permits unrestricted use, distribution and reproduction in any medium provided that the original work is properlyattributed.ca
- dc.rights.accessRights info:eu-repo/semantics/openAccessca
- dc.rights.uri https://creativecommons.org/licenses/by/4.0/ca
- dc.subject.other Optimal macroeconomic policyca
- dc.subject.other Optimal taxationca
- dc.subject.other Computational techniquesca
- dc.subject.other Heterogeneous agentsca
- dc.subject.other Distribution of wealth and incomeca
- dc.title Optimal government policies in models with heterogeneous agentsca
- dc.type info:eu-repo/semantics/workingPaperca