Impacto de una reforma fiscal sobre el bienestar económico en un ambiente de incertidumbre[Impact of Tax Reform on Economic Welfare in an Uncertainty Environment]

This research is aimed at examining the impact of tax reform on economic welfare in an environment of uncertainty in a small open economy with a regime of flexible exchange rate. It is assumed that the economy is populated by identical rational risk-averse individuals. Unlike the typical assumption...

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Bibliographic Details
Published inIDEAS Working Paper Series from RePEc
Main Authors Venegas-Martínez, Francisco, Rodríguez-Nava, Abigail, Palafox-Roca, Alfredo Omar
Format Paper
LanguageEnglish
Published St. Louis Federal Reserve Bank of St. Louis 01.01.2014
Subjects
Tax rates
Tax reform
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Summary:This research is aimed at examining the impact of tax reform on economic welfare in an environment of uncertainty in a small open economy with a regime of flexible exchange rate. It is assumed that the economy is populated by identical rational risk-averse individuals. Unlike the typical assumption of infinitely-lived agents, it is assumed in this paper that with some (positive) probability agents are living in a given finite time. It also assumed that individuals are subject to tax rates on wealth, income and consumption. The distinctive feature of the proposed model is that macroeconomic fundamentals have a random dynamics that is modeled with diffusion processes or diffusion processes combined with Poisson jump processes.