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Dynamic Corrective Taxes with Time-Varying Salience / Ben Gilbert, Joshua S. Graff Zivin.
- Format:
- Book
- Author/Creator:
- Gilbert, Ben.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w25014.
- NBER working paper series no. w25014
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2018.
- Summary:
- The intermittency of payment for many goods creates a disconnect between paying and consuming such that the marginal price is not always salient when consumption decisions are made. This paper derives optimal dynamic corrective taxes when there are externalities as well as internalities from inattention and persistence in consumption across periods. Our optimal taxes address dynamic inefficiencies that are not captured in static models of inattention. We also characterize a second-best constant tax and the excess burden associated with time-invariant tax rates. We then calibrate the model to U.S. residential electricity consumption.
- Notes:
- Print version record
- September 2018.
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