Socially Optimal Redistribution and Growth: A Further Warning on the Welfare Significance of Representative Consumers' Preferences
BP2-STS
- Grossmann, Volker ORCID University of Fribourg
- 2005
Published in:
- FinanzArchiv. - Mohr Siebeck. - 2005, vol. 57, no. 2, p. 182
English
In this paper, it is illustrated in a simple balanced growth model with redistributive capital income taxation that it is generally misleading to attribute welfare significance to the preferences of a representative consumer, if lump sum redistribution is unfeasible. This result holds even if a representative agent exists for all endowment distributions, i.e. even if there always exists an endowment distribution such that utility of the representative consumer has welfare significance for any social welfare function. Moreover, it can be concluded from our example that, in general, the net return to capital should be lower than the (social) marginal productivity of capital.
- Faculty
- Faculté des sciences économiques et sociales et du management
- Department
- Département d'économie politique
- Language
-
- English
- License
- License undefined
- Open access status
- green
- Identifiers
-
- DOI 10.1628/0015221012904986
- ISSN 0015-2218
- Persistent URL
- https://folia.unifr.ch/unifr/documents/322387
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